Fintech Industry Expects Government Push for Smaller NBFCs Working in Tier-2, Tier-3 Cities

Fintech is no longer considered a trend. The industry has now become one of the fastest growing segments in technology and has changed the way financial services are promoted. As 2023 is almost at the brink, all industries across the country are expecting changes that will more or less support their growth trajectory. The fintech sector is not an exception in this situation. Leaders in the fintech industry are already submitting their wish lists to Finance Minister Nirmala Sitharaman as the new Union Budget 2023 is much closer. According to the sources, in the last pre-budget meeting, the finance minister met fintech industry experts to seek their opinions on their expectations for the upcoming budget to accelerate the sector’s growth and revenue.

According to the research and market report, the fintech market is expected to reach Rs 9.2 billion at a CAGR of 24.96 percent during the forecast period 2022-2027. In fact, with the development of trends and technology, the industry is expanding at a furious rate and the market is seeing an increase in digital payments. The reasons for the growth are UPI, credit and debit cards. Despite this, borrowers have felt the sting of higher interest rates throughout the year as a result of the central bank’s rate hikes to control inflation. In addition, the Reserve Bank of India raised the repo rate by 225 basis points and further hikes may come down the line. Therefore, key figures from the industry urged the government to take new measures to ease the burden on both lenders and debtors. So let’s dive into industry expectations as part of the relief from the upcoming budget.

Budget expectations

Simple financial burden: One of the most important demands businesses have from the government for the next budget is to further ease the financial burden for start-ups in the fintech industry. The industry also wants depreciation on the fixed assets fintech companies use to save tax. Similarly, in order to solve the problem of double taxation and reduce the financial burden that Employee Stock Ownership Plans (ESOPs) impose on employees, significant tax breaks must be offered to new employees. In addition, they also comment on the comfort they find in the tax’s potential to promote economic inclusion and provide significant job opportunities.

Improving financial inclusion with digitalisation: The fintech industry expects more assistance from the government for better relations with banks that will reinforce the current paradigm. Professionals in the area emphasized that there should be a level playing field for both online and offline lenders. And putting in place appropriate regulations to control the fintech sector will bring transparency to businesses in the industry and undoubtedly help them regulate finances. Fintech will develop more if India becomes fully digitized. Therefore, the government should help smaller NBFCs and fintechs working on their products in Tier-2, Tier-3 and Tier-4 cities with adequate co-lending limits and rates.

Rules for disbursement of loans: The fintech sector wants the government to implement policies that will promote cooperation between banks and loan providers to help customers get loans in an accessible way, whether for personal or business purposes. The fintech sector wants to increase the 80C exemption for personal and student loans so that higher education loan seekers can benefit from tax savings and fully utilize the deduction allowed under Section 80C, which is Rs 1,50,000. In addition, the Budget may contain measures to provide sufficient liquidity to the organized gold loan segment to further meet consumers’ credit requirements and the business owners’ need for working capital with regard to gold loans.

All things considered!

In a nutshell, the fintech industry is here to stay because it provides unparalleled and invaluable convenience in doing business across the board. Therefore, the industry expects the government to prioritize the policies mentioned above along with a few others to ease the stress of both lenders and borrowers in the upcoming Union Budget 2023 to promote financial inclusion and its benefits for all.

The author is the founder and CEO of Buildd.

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