Embracing Responsible Finance in the Digital Era

Introduction
In the rapidly evolving landscape of digital finance in India, ensuring responsible financing has become more important than ever. At a recent session, Kunal Shah, Founder of Cred—a platform that has transformed credit card payments and rewards—offered profound insights into responsible credit behavior. Drawing on his personal experiences and industry expertise, Kunal emphasized how critical it is to foster financial literacy, trust, and transparency in India’s burgeoning fintech ecosystem.

1. A Personal Journey Shaped by Irresponsible Credit Kunal opened his talk with a deeply personal story, describing how his family once made unfortunate credit decisions that led to severe financial hardship. They were forced to sell most of their belongings and move into a 100-square-foot room. At just 14–15 years old, Kunal began working part-time jobs—data entry and even delivery—to help support his family.

Despite his ambition for a science degree, limited options and financial constraints led Kunal to study philosophy, simply because it was the only available morning course he could attend while juggling his jobs. Although his path was unplanned, this early exposure to the consequences of poor credit decisions sparked an enduring commitment to promoting responsible financing.

“My family’s irresponsible credit decisions forced us to start from scratch. While we have managed to bounce back, 99% of families never truly recover from such setbacks” — Kunal Shah

2. Why Responsible Finance Matters Kunal’s experiences demonstrate that irresponsible lending and borrowing can devastate individuals and families. In a country striving for economic development, a robust credit system is crucial—but it must be accompanied by responsible usage. He pointed out that while India’s DPI (Digital Public Infrastructure) and innovations such as UPI and Account Aggregators have opened immense opportunities, misuse or lack of awareness can trigger far-reaching negative consequences.

Key Risks

1. Lack of Financial Literacy: Even high-income earners often misunderstand interest rates on their credit cards or the true costs of delayed payments.
2. Over-Leveraging: Just as health suffers from overeating, an over-extension of credit can quickly turn even financially “healthy” individuals into defaulters.
3. Speculative Behavior: When unsecured loans or credit are used for high-risk activities—like certain forms of real-money gaming—defaults rise, impacting lenders and the entire ecosystem.

3. Trust & Transparency: The Foundation of a Healthy Credit Ecosystem
According to Kunal, every stakeholder in finance—whether banks, fintechs, or regulators—operates in the “business of trust.” Building and maintaining trust hinges on transparency, fair practices, and real consumer education.

1. Educating Customers: Kunal highlighted how many users simply don’t understand how interest calculations or payment schedules work. Efforts to spread financial literacy must go beyond regulatory mandates and become an industry-wide mission.
2. Data Security & Privacy: As digital finance scales, companies must treat data protection not as a mere checkbox for compliance but as a serious, core responsibility.
3. Long-Term Vision: While there are always shortcuts to rapid growth or profits, Kunal stressed the importance of resisting easy wins that harm customers or erode trust in the long run. Cred, for instance, won’t launch a product unless 80–90% of its own team members test and believe in it first.

4. The Domino Effect of Irresponsible Lending
Kunal referenced a comparison by Uday Kotak: if one rice farmer in a region over-waters his field, it doesn’t just affect his farm; it impacts the entire water supply and all surrounding fields. Similarly, one lender’s overly aggressive or lax approach can ripple through the credit ecosystem, inflating default rates and inviting stricter regulations. This, in turn, can stifle innovation for everyone else.

“If we create the next 50 or 100 million users who end up having bad credit experiences, many of them will abandon credit entirely—like never using a knife in the kitchen again after one cut.”

5. Building for the Future: A Collective Responsibility
As India becomes one of the largest digital finance markets in the world, fintech players, policy-makers, and consumers all share a responsibility to nurture a healthy ecosystem. Kunal emphasized:

• Engagement in Consumer Literacy: Beyond business models, stakeholders should invest in user education—whether through workshops, outreach, or transparent product design.
• Regulatory Synergy: While regulation will always evolve, industry leaders can preempt draconian measures by practicing self-regulation, data security, and fair lending standards.
• Ethical Innovation: Fintech solutions must solve real consumer problems without resorting to exploitative or speculative practices. The goal should be to outlast today’s trends and truly add value.

Conclusion
Kunal Shah’s journey—from a teenager forced to work multiple jobs to the founder of a prominent fintech platform—underscores how critically responsible credit behavior can be. As India forges ahead with digital public infrastructures and innovative fintech solutions, weaving a culture of financial literacy,trust, and responsible practices must become non-negotiable. In the end, a resilient ecosystem depends on each of us—entrepreneurs, established institutions, and consumers alike—stepping up to ensure that growth is both inclusive and sustainable.

To watch the full session, click here