Ahead of the interim budget, the fintech industry is anticipating measures that can drive the digital payment ecosystem in India. Here are a few measures proposed by fintech firms that they believe can further strengthen the digital payment ecosystem in India.
Focus on R&D
One of the key proposals set forward by the fintech players is an increased focus on research and development. "We expect the budget to provide incentives that encourage fintechs to drive further innovations for other aspects of banking like credit, investments, savings and advisory," says Bipin Preet Singh, co-founder and CEO, MobiKwik.
According to Nalin Negi, chief financial officer, BharatPe, the introduction of initiatives for research, product, innovation and skill development in the interim budget, would encourage indigenization that can help India emerge as a global innovation hub.
Tax Benefits
The stakeholders of the digital payment ecosystem are also anticipating tax benefits for the fintech startups. “To nurture the blooming startup ecosystem, the Government should further broaden the eligibility criteria and look at providing tax reliefs to employees in start-ups around Employee Stock Ownership (ESOPs). I am optimistic that this budget will set the stage for enhanced collaboration between fintech innovators and policymakers to nurture an ecosystem that can equitably power India's digital economic aspirations," says Negi.
Anand Kumar Bajaj, founder, MD & CEO, PayNearby, proposes specific measures, including a special 5% GST (goods and services tax) rate for startups working for last-mile empowerment, facilitating crucial financial and digital services to the citizens. "A GST subsidy, even a modest one, would significantly ease the reach of financial services and government benefits, encouraging innovation in the financial empowerment space," says Bajaj.
"We also urge for a waiver of GST on all financial services made available from BC outlets, an Income Tax relief for the next seven years, and reduced import duty on essential financial services devices," he adds.
Financial Inclusion
Another proposal put forward by the industry stakeholders is increasing the credit corpus for MSMEs. “In 2024, we expect the upcoming Union Budget to further drive financial inclusion by increasing the credit corpus for MSMEs. This involves extending support to microfinance institutions (MFIs) and small finance banks (SFBs) that help them meet their financing needs. To reach enterprises in remote corners of the country, we foresee incentives for fintechs that provide lending solutions beyond Tier 2 & 3 cities,” says MobiKwik’s Singh.
Reflecting similar thoughts, Mahesh Shukla, CEO & founder, PayMe, observes that measures to drive financial inclusion would encourage upskilling initiatives for the young workforce. "The industry expects the Budget to promote financial inclusion, provide lending solutions for MSMEs, and encourage upskilling initiatives for the young workforce. The Digital Lending Association of India (DLAI) expects a dedicated India Fintech Credit Fund (IFCF) to provide affordable finance to fintech companies. The budget is significant not only for its financial provisions but also for its potential to cultivate a knowledgeable and adaptable workforce. A forward-thinking strategy would involve investing in the education and training of our young workforce, coupled with vigorous support for upskilling projects," says Shukla.
Meanwhile, BharatPe’s Negi anticipates measures to increase capital availability for fintechs operating in underserved domains like rural credit, digital payments and digital lending. “Regulations around digital banking, data governance and emerging technologies have fueled the building of sustainable fintech businesses over the last year or so, and I am hoping that the budget will introduce additional measures that can aid credit growth, financial inclusion and digital enablement of financial services,” says Negi.
AI Innovation
Fintech stakeholders are also anticipating regulatory developments such as forthcoming fintech SRO and cloud repository in the interim budget that would foster a responsible and safe fintech ecosystem. "We expect the budget to further scale centres of excellence for AI innovation as well as increase investments in supercomputing to drive the growth of home-grown AI solutions," says MobiKwik’s Singh.
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