Fintech

Budget 2023: What fintech companies are expecting from Finance Minister Nirmala Sitharaman

Budget 2023 expectations: With just a week left for the annual Budget presentation by Union Finance Minister Nirmala Sitharaman, most sectors are jotting down their wishlists for the coming financial year. The fintech sector in India, which has been labelled as one of the fastest-growing fintech markets in the world, has witnessed major transformation and growth in the last few years, especially during and after the pandemic. 

The sector has been recognised as a crucial element in the government’s financial inclusion journey along with its Unified Payments Interface (UPI) rollout across the country and beyond. The fintech firms are also playing a major role in India’s Digital India movement and expect to achieve the $5 trillion milestone by 2025. As per the latest Tracxn report data, there are around 9,154 fintech companies in India with urban and rural customers. Most firms are aiming that their consumers can become more financially literate, tech savvy, and comfortable with buying financial products through apps and online portals. In a bid to achieve this goal, most companies are expecting the Centre might introduce adequate policy measures and tax measures to boost the fintech sector. 

Here are a few key points and expectations from the fintech sector: 

A latest Tracxn report has stated that there has been a decline of almost 47 per cent in fintech start-ups’ fundraising in 2022. As per the report, the start-ups have raised a total of $5.65 billion in 390 rounds in 2022, which was about 29 per cent in 2021. The drop in funding, the report says, can be attributed to the decline in late-stage funding from $8.3 billion in 2021 to $3.7 billion in 2022, a 56 per cent fall. 

With the growth in the space expected to continue in the long run, propelled by a large unbanked population and rising mobile phone usage, the Budget 2023 can bring in steps to boost spending and investment that can be conducive to the growth story.  

Anand Kumar Bajaj, Founder, MD & CEO, PayNearby 

“Presently, India’s path to financial inclusion is being paved, courtesy of the ground-breaking financial solutions offered by leading fintech players. A robust tech stack riding on the back of a strong distribution network has opened doors for Bharat to access innovative financial products and services. The work that we are doing to make banking services accessible to all in Bharat is a case in point of the one-of-its-kind infrastructure that we have built to relay these services. However, for these services to reach the citizens in the hinterlands needs technology, security, trust, and the necessary Government support. Towards this purpose, Budget 2023 should urgently consider and offer some tax benefits on the total expenditure incurred by fintechs involved in the financial inclusion mission. A GST subsidy, even in a small percentage, will go a long way in helping banking services and Government benefits reach the masses with much ease. Plus, this will encourage companies in the financial inclusion space to innovate more and build revolutionising technologies to make financial services available to everyone, everywhere.” 

Mandar Agashe, Founder MD & VC of Sarvatra Technologies 

“There have been several incentive schemes announced by the Government in the last few Budgets which have helped promote digital payments, especially the UPI-based payments. This is in line with the Government’s ‘Digital India’ initiative aimed at financial inclusion. We are expecting the momentum to continue in the upcoming Budget. Serving the unserved and underserved is the mission that should continue with UPI 2.0’s recent products, such as UPI 123 and UPI Lite, the two most crucial products that will help penetrate the semi-urban and rural regions of India because of the easy accessibility it offers to those who can’t afford smartphones but are using feature phones and want to transact digitally. At the gram panchayat level or at the village level, Self-Help Groups (SHGs) can also promote the usage of offline payments through UPI. This will help the UPI to grow really fast.”  

Swapnil Jambhale, Co-founder, SafexPay 

“We would recommend tax incentives that would effectively pass on to the end consumer to encourage them to contribute towards automation and digitisation. In the current GST framework, fintech companies usually suffer a loss of input credit. With the Government ensuring that the input credit is fully provided for, revenue leakages can be avoided, and eventually, the benefits can be passed on to the end (retail) consumer. In December 2021, the Union Cabinet cleared Rs 1,300-crore incentive scheme to promote digital payments and digital transactions using UPI and RuPay debit cards. A similar incentive scheme may be extended to RuPay credit cards in the upcoming Budget. This will encourage greater adoption of RuPay credit cards in the country.”  

Kumar Shekhar, Deputy Country Manager, Tide India   

“Today, the Indian fintech market is predicted to reach $200 billion by 2030. Marking the immense growth potential of the industry that is unlocking the doors for financial inclusion across India. On the same lines, we expect the honourable finance minister to unravel the Budget 2023 with business-friendly tax policies encouraging smaller fintech businesses/startups by providing exemptions in GST till a certain limit on revenue. This will eventually reduce the burden of tax and challenges that the startups face at the nascent stage. Also, to holistically boost the development and growth of the fintech and financial industry, we look forward to the central authority’s support in bringing amendments that create a push for fintech incubation centres across the country that would subsidise basic amenities such as internet and office space rent or providing them with a credit line to help them avail of collateral-free loans with the first year being interest-free, etc.” 

Deepak Kothari, Co-founder of ftcash 

“The Union Budget 2023-2024 has the opportunity to help provide the fintech sector with the much-needed impetus. Currently, fintechs collaborate with banks on a one-to-one basis. The provision of a government scheme that provides a sovereign guarantee by the government of such credit lines will help channelise and enhance access to funds for fintech and also allow targeting of certain sectors/segments/regions in a cost-efficient manner. Also, fintechs today collaborate with other financial services players and invariably in such arrangements there’s a potential loss of Input Credit in the current GST framework. Ensuring that the input credit is fully provided for will go a long way in ensuring that revenue leakages are avoided and benefits can be consequently passed on to the end consumer.” 

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *