Budget 2023: Fintech Industry Expects Govt Push For Smaller NBFCs Working In Tier-2, Tier-3 Cities

Leaders in the fintech industry are already submitting their wish lists to Finance Minister Nirmala Sitharaman, as the new Union Budget for 2023 is much closer

Fintech is no longer considered a trend. The industry has now become one of the fastest-growing segments in technology and transformed the way how financial services are fostered. Since 2023 is almost on the brink, every industry across the country is anticipating changes that will more or less support its 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 for 2023 is much closer. According to the sources, in the last pre-Budget meeting, the finance minister met with experts in the fintech industry to seek their opinions on their expectations for the upcoming Budget to accelerate the sector's growth and income.

According to the Research and Market report, the fintech market is anticipated to reach Rs 9.2 billion at a CAGR of 24.96 per cent during the forecast period of 2022–2027. Indeed, with evolving trends and technology, the industry is expanding at breakneck speed, and the market is seeing an increase in digital payments. The reasons for the growth are UPI, credit, and debit cards. Despite this, loan 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. Additionally, the Reserve Bank of India raised the repo report by 225 basis points, and further hikes could be forthcoming down the line. Thus, key industry figures urged the government to take fresh actions to ease the burden on both lenders and debtors. So, let's dive into the industry's expectations as a component of the relief from the upcoming Budget.

Budget Expectations

Ease in Financial Burden: One of the most significant 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 used by fintech companies to save on taxes. Correspondingly, in order to address the dual taxation issue and lessen the financial burden that Employee Stock Ownership Plans (ESOPs) impose on employees, substantial tax relief needs to be offered to start-up employees. Additionally, they are also commenting on the solace they find in the tax potential to advance financial inclusion and provide substantial job possibilities.

Improve Financial Inclusion with Digitalisation: The fintech industry anticipates more assistance from the government for better relationships with banks that will reinforce the current paradigm. The professionals in the area stressed that there should be a fair playing field for both online and offline lenders. And putting in place appropriate regulations to control the fintech sector will provide transparency for businesses in the industry and undoubtedly help them to regulate finances. Fintech will develop more if India becomes fully digitalised. Thus, the government should be helping smaller NBFCs and fintech which are working with their product in Tier-2, Tier-3, and Tier-4 cities with adequate co-lending limits and rates.

Regulations for Loan Disbursal: The fintech sector wants the government to implement policies that would promote collaboration between banks and loan providers to assist customers in getting loans in an accessible manner, whether for personal or business purposes. The fintech sector wants to increase the 80C exemption on personal and student loans so that those seeking loans for their higher education may benefit from tax savings and can fully use the deduction allowed by Section 80C, which is Rs 1,50,000. Additionally, the Budget may include measures to provide sufficient liquidity for the organised gold loan segment in order to further fulfil consumer credit demands and company owners' needs for working capital with regard to gold loans.

All Things Considered!

In a nutshell, the fintech industry is here to stay because it provides unprecedented and priceless convenience in doing business across the board. Therefore, the industry anticipates that the government will prioritise the policies mentioned above along with a few others to relieve the stress of both lenders and borrowers in the upcoming Union Budget of 2023 in order to advance financial inclusion and its advantages for all.

The author is the founder and CEO of Buildd.

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