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Indian fintechs and associated entities are hoping that the Union Budget 2024 will provide a boost and empower firms to extend their reach beyond Tier-II regions, with an emphasis on supporting enterprises led by women.
The fintech industry, which has witnessed regulatory reforms over the last year, expects the Budget, scheduled to be presented by Finance Minister Nirmala Sitharaman on February 1, will further encourage financial inclusion, empower micro-small-medium enterprises (MSMEs) with lending solutions, and push for upskilling initiatives for the country’s young workforce.
Most people feel the Budget 2024, a Vote on Account, will have no major announcements. The Digital Lending Association of India (DLAI), an industry body for digital lenders in the country, expects assistance in the form of a dedicated India Fintech Credit Fund (IFCF) to provide affordable finance to fintech companies.
“The small and medium-sized Fintechs would need and expect support in the form of a dedicated India Fintech Credit Fund (IFCF) which is mandated to provide wholesale finance at reasonable cost to the digital lenders.
"Some of these new-age lenders are now moving to Tier-4 cities and beyond and lend to diverse sets of customers,” said Jatinder Handoo, chief executive officer (CEO), DLAI.
Handoo believes that a fintech credit fund like IFCF will enable fintech lenders to extend their reach across the country and ensure a sufficient flow of credit to women.
“To incentivise horizontal movement of fintech lenders beyond Tier-4 cities, the flow of credit to women, the inclusion of thin filers and expand the ambit of formal finance, IFCF will be a remarkable milestone in the fintech ecosystem,” he said.
Companies said they expect provisions that will enable them to ease their financial burden.
“The Budget should also announce some provisions to ease financial burden on fintechs and provide tax-saving benefits to startups in the sector.
"Policies should incentivise creation of a fertile environment for fintech startups to innovate and build products and solutions that will be more inclusive, adaptable for both consumers and businesses,” said Akash Sinha, co-founder & CEO, Cashfree Payments.
India is a growing market for fintechs.
A Centre for Advanced Financial Research and Learning (CAFRAL) report highlighted that out of the 14,000 newly founded start-ups between 2016 and 2021, close to half belonged to the fintech industry.
The report further stated that fintech lending is projected to exceed traditional bank lending by 2030.
Along similar lines, fintech companies are optimistic about the growth of MSMEs in the country for 2024, along with the country’s need for a talented workforce.
“Given the increased penetration of new age technologies in businesses and to augment the economic impact of Generative Artificial Intelligence (AI), we expect increased collaboration between the public and private sectors and increased investments, for training and upskilling the growing young workforce,” said Akshay Mehrotra, co-founder & CEO, Fibe; a consumer lending fintech.
“Tier-II, Tier-III and beyond, cities have emerged as hotbeds of digitisation, with MSMEs in these regions actively adopting fintech solutions to streamline operations, enhance customer experiences, and expand their reach.
In addition, once the UK-India free trade agreement is signed, it will open opportunities for Indian MSMEs, especially for women-led enterprises, and augment their global competitiveness by enabling them to participate in international trade,” said Gurjodhpal Singh, CEO, of Tide India, a fintech platform.
Meanwhile, with the rise of digital fraud, Sinha from Cashfree emphasised the need for regulations aimed at curtailing cybercrime in the country.
“I expect the introduction of regulatory frameworks that will help curb digital fraud and build a safer and more secure digital payment environment, reinforcing the trust of users in digital transactions.
"Meanwhile, in the Union Budget 2024-25, the government should further push for initiatives that will focus on boosting adoption of digital payments in Tier-II and beyond regions,” he added.
