The Indian FinTech industry is eyeing the Union Budget 2024-25 for measures that would spur responsible growth and innovation within the FinTech space.
The Budget is likely to address financial inclusion as a critical aspect, with the announcement of a simplified credit platform emphasizing the Reserve Bank of India’s commitment to facilitate easy access to credit for small businesses and individuals. This platform is expected to simplify and speed up the loan process, making it more efficient for borrowers to secure essential financing.
Collaborative efforts with key stakeholders, including SIDBI, NABARD, and the agriculture ministry, are seen as pivotal in propelling India’s digital business onto the international stage. The Budget is expected to highlight the growth potential of initiatives like ONDC and eCommerce for emerging India.
High hopes
Although the Budget is a Vote on Account, and a detailed version expected after the formation of a new government, FinTech companies hope for continued government support for digital infrastructure and technology adoption. Initiatives that encourage the adoption and expansion of rural financial services, along with support for new fintech-led business models, are foreseen.
The sector is optimistic about the potential simplification of regulatory frameworks, with FinTech companies exploring innovative ways to reach underserved populations. Collaboration between FinTech companies and traditional financial institutions is expected to become more prevalent, leading to hybrid models that combine the strengths of both sectors.
The RBI recently unveiled a draft framework aimed at regulating FinTech activities. Once finalised, this framework is expected to guide and support responsible growth and innovation in the Indian FinTech sector, contributing significantly to financial inclusion and wider economic progress – a key area of anticipation for the next Budget.
Expanding reach
The industry is also eyeing the Budget for possible support to extend their reach beyond Tier-II regions, with a special emphasis on empowering women entrepreneurs. It hopes the Budget will offer lending solutions for micro, small and medium enterprises (MSMEs), and advocate for high-level initiatives targeting the country’s young workforce.
Companies are also anticipating provisions in the Budget to ease their financial burdens. Calls for tax-saving benefits for startups in the fintech sector and policies that encourage an enabling environment for innovation and product development are prominent.
Cyber security
Addressing the growing concern over digital fraud, there is an emphasis on the need for regulatory frameworks aimed at curbing cybercrime in the country. The expectation is that the budget will introduce measures to strengthen cyber security, build a safer digital payment environment and accelerate the adoption of digital payments in Tier-II and beyond regions.
In terms of taxation, there are calls for total spending benefits for FinTtechs involved in financial empowerment missions. Specific initiatives proposed include a special 5% GST rate for start-ups working for last-mile empowerment, GST subsidies, and Income Tax relief for a specified period. The importance of a simplified and rationalized GST structure is highlighted for economic optimization.