Promoting Financial Inclusion To Boosting Small Businesses: Key Expectations Of Fintech Industry From Budget 2024

Budget 2024 Expectations: This year, the market expects the Budget's focal point to be actively promoting financial inclusion in the country

By Roshan Shah

The onset of the New Year is accompanied by hopes and expectations associated with the interim Budget. All individuals, industries, and businesses look forward to this time as it sets the stage for the upcoming months. Viewing the situation through the lens of the fintech industry, it has high hopes from this year's interim Budget. While the past year, the sector experienced regulatory reforms that helped drive the sector’s growth, this year, the market expects the Budget's focal point to be actively promoting financial inclusion in the country.

Expectations from Budget 2024-2025

India boasts of having the third-largest fintech ecosystem across the globe. The industry is the backbone of India's economic growth and resilience. Hence, we expect the Interim Budget 2024 to recognise the potential and challenges of the sector and help build it into a supportive, thriving ecosystem.

Accelerate digital payments, promote innovation, and reduce fraud

The government has constantly supported digital payment platforms and introduced initiatives aimed at driving further growth in the digital economy. The fintech sector anticipates significant transformation in the fintech, crypto, and digital payments aspects this year. Additionally, there are hopes that the government will facilitate the adoption of trade financing, simplify tax and compliance standards, and promote financial digitisation and innovation. There is also hope that the budget will announce the formulation of regulations to mitigate digital fraud and build a safer and more secure digital payment ecosystem so that digital payments can once again earn the trust of consumers.

Boost the Fintech platforms' growth

In India, the trade finance gap is significant. Because of this, small businesses have limited access to traditional banking and hence face challenges due to a lack of sufficient credit and liquidity. Out of nearly 63.4 million MSMEs in the country, only 15-20 per cent have access to formal credit. Various fintech platforms are providing an effective solution by offering collateral-free financing and integrated credit insurance. They can be pivotal in reshaping the export factoring landscape, fostering economic growth, and meeting the evolving needs of businesses in the digital age.

Ensure ease of working for small businesses and provide them with lending solutions

One notable trend on the horizon is the increasing collaboration between fintech platforms and traditional banks. With the government actively promoting banks as lending trade partners within the fintech ecosystem, a symbiotic relationship is envisioned. This alignment of business interests is expected to simplify the process of lending finances for businesses, bridging the gap between traditional banking and innovative fintech solutions. It is also likely to enhance financial inclusion, providing businesses with streamlined access to capital through digital platforms. Hence, the Union Budget should consider supporting SMEs and MSMEs by improving access to liquidity and establishing policies that address the challenges faced by them and resolve them.

To sum up

Overall, Budget 2024-2025 should incentivise the creation of a nurturing environment for fintechs to innovate and build solutions that will be inclusive and cater to the demands of both consumers and businesses.

The fintech industry is one of the strong pillars of the Indian economy. Hence, the sector is looking forward to a Budget that embraces innovation and unlocks its growth potential. Hopes are high that the interim Budget 2024 will give due recognition to the challenges faced by the industry and help build a supportive, nurturing ecosystem. It is positive about receiving the government’s support and is eagerly waiting for policies fostering growth and boosting India’s financial landscape. Initiatives that bolster financial services adoption and expansion, provide opportunities for fintechs to introduce innovative products and services, and empower SMEs will be welcomed.

The author is the co-founder and CEO at VoloFin.

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