2024-07-16 00:36:57
Budget Fintech: Union Finance Minister Nirmala Sitharaman is going to present the 11th budget of the Narendra Modi-led NDA government on July 23. The whole country is waiting for this budget with great hope. With a GDP growth rate of 8.2% in the last financial year 2023-24, the Indian economy has been successful in recovering from the shocks of Kovid, so there are a lot of expectations from this time’s budget. MobiKwik Co-founder and CEO of Bipin Preet Singh Says that this budget is expected to become an effective document of the government’s far-reaching policies and vision, which will help in realising the dream of a developed India.
Connecting unbanked populations to the formal economy
The National Strategy for Financial Inclusion 2019-2024 highlights the need to reduce the gap between traditional finance and underprivileged populations. Financial inclusion is central to the fintech sector, so the budget should focus on announcing support measures. It is also important to expand the digital economy in rural and remote areas to ensure access to basic financial services for all.
More number of jobs will be available
Access to financial services can boost investment in human capital and mitigate the challenges of economic shocks. It also leads to creation of more number of jobs. For example, most Indians who live in emerging metros and smaller cities, including MSMEs, find it difficult to get timely loans through traditional lending channels as they lack basic banking facilities and have no credit history. As per RBI’s classification, Tier-3 and Tier-4 cities have a population between 10,000 – 49,999 people and are cities where people lack access to financial products and services. These areas face challenges due to limited financial literacy and inadequate banking infrastructure and due to low access, it is very important to make a variety of financial services available to people in these areas.
Continue to empower MSMEs
It is essential to support MSMEs as they are the backbone of the economy. The Budget should prioritise announcing incentives for small-sized banks as well as facilitating easy access to credit for them. This strategic approach will strengthen businesses in tier 2 and tier 3 cities and provide them with the resources they need to grow. The government has already allocated substantial funds to support MSMEs. Rs 22,137.95 crore was allocated in the interim Budget, which includes an infusion of Rs 9,000 crore into the Credit Guarantee Fund and a fund of Rs 10,000 crore for technology and infrastructure development. Incentives for MSMEs, fiscal support for banks and digital credit assessment can reduce the credit gap and boost the contribution of MSMEs to the economy. The Union Budget is an opportunity to improve the regulatory framework, introduce better tax benefits and promote infrastructure for digital payments, which will accelerate MSME growth and also promote digitisation.
Putting in place a better regulatory framework
A strong regulatory framework can prove to be extremely helpful for fintech companies, as clear and concise rules can help emerging fintechs establish themselves despite limited time and resources. A well-organised framework can encourage innovation and growth instead of businesses getting entangled in legal complexities. The Open Credit Enablement Network (OCEN) is expected to establish a strong credit flow to merchants across India, including tier 2 and tier 3 cities. Additionally, a uniform KYC framework will help reduce compliance costs and increase operational efficiency.
Strategic Partnerships
The Budget’s prioritisation of partnerships between large public sector banks and fintech companies will have significant benefits. Such partnerships can leverage the strengths of both sectors, combining the wide reach and credibility of PSBs with the cutting edge technology of fintech companies, delivering business benefits to underbanked communities. PSBs have invested heavily in disruptive technologies such as AI and blockchain to improve customer interactions and operations. Additionally, innovation-backed policies and fintech solutions will play a key role in furthering the cause of financial inclusion.
Incorporating AI
Government investments in AI-powered solutions can overcome language barriers across India by boosting economic opportunities, especially in rural areas. Beyond the rural environment, the impact of AI’s transformative potential has so far been limited only in urban areas, revolutionizing customer service and increasing overall efficiency. As we await the budget, expectations are high for measures that can leverage the full potential of the fintech sector. With the right policies and investments, this budget can pave the way for a fintech landscape that is more advanced, inclusive, and integrated into the broader economy. This is a crucial time for fintech, and with the anticipated support, the sector is well-positioned to drive significant economic and social progress in the years to come.