India has had an exceptionally buoyant year as far as start-ups and businesses are concerned. Even when economy remained under the shadow of the pandemic, Fintech Industry has grown exponentially over the last couple of years. Government has taken steps to strengthen the infrastructure which has helped the nation across sectors, right down to every individual.
More strength to Fintech Sector
While the government did take a supportive stance in 2021, the expectation from budget this year would be more backing in terms of easy availability of funds, tax SOPs and enhanced regulatory framework. In spite of making a big impact on the overall economy, Fintech Industry doesn’t enjoy the level of liquidity which is otherwise available to large traditional Financial Institutions. We need the government to encourage banks to work alongside Fintech NBFCs and resume funding for them and look for parameters beyond ratings. Allowing refinance benefits to Fintech NBFCs can be a step towards the right direction. The government must continue to supplement its credit support programs to continue to empower the NBFC segment.
Financial inclusion and creating more employment opportunities is crucial this year. The fintech sector today is looking to the government for liberalising the tax regime for the financial sector. The financial inclusion can only happen if the government is willing to look at liberal taxing. Priority Sector Lending (PSL) already helped boost priority sectors such as tourism, hospitality etc. We believe definition of PSL should be widened further so that FinTechs should be able to target more such segments. This shall help in driving financial inclusion. Tax subsidy is another crucial expectation that the FinTech sector has from the government in this budget. If the focus is to move towards a more digitally empowered country, then we must give Tax subsidies to businesses in tier II and tier III cities that are already making the best use of the digital transformation. This incentive will be the biggest draw in the financial inclusion that we seek. Accessibility to funds and tax incentives will be a crucial factor in the year 2022 to reach out to the unbanked or unserved segments of society.
Strengthening of Digital Infrastructure
The initial days of the pandemic saw a demand contraction. However, the timely intervention and appropriate policy framework by the government have helped the industry to recover. Sectors like travel and tourism, agriculture, clean energy etc. are looking towards the government to garner larger support and funding. The Fintech revolution has taken off in a big way in India and the world is watching its growth. But to continue the steady growth chart, the government would have to create additional revenue generation streams with sustainable business models. The digital wave bolstered by impact lending, UPI aided with Aadhar and account aggregation initiatives, but now it is time to take it to the next level. While certain initiatives have took off successfully in the country, we need further enhancements in that space. Enabling machine learning and data analytics along with further technologies can help us all move ahead, confidently towards a cashless, digital economy.
FinTech has the power to impact everyday lives in a positive way. If the above mentioned steps are considered in the upcoming budget by the government, then it would not only strengthen the sector, but it will create a sustainable society that is focused on wealth for one and all and national growth.
The author is CFO, LoanTap. Views are personal.