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Budget 2024: Fintech Players Demand Streamlined Approach For Digital Payments And DigiLocker

While mindful that this is the interim budget, industry stakeholders hope that it will have announcements that foster financial inclusion and help build a robust ecosystem for start-ups

Budget 2024: Fintech Players Demand Streamlined Approach For Digital Payments And DigiLocker
POSTED ON January 31, 2024 11:32 PM

All eyes are set on February 1 when finance minister Nirmala Sitharaman unveils the interim union budget FY2024. While this is a vote-on-account that would approve the continuation of existing programs and is not a comprehensive budget, fintech startups and regulatory bodies are still hopeful. They hope it will comprise announcements to enhance stability in the ecosystem and foster greater collaboration amongst industry stakeholders, considering that this budget will precede the upcoming 2024 general elections.

For starters fintech players anticipate the government will extend more support to the MSME sector to accelerate their growth. According to Sachin Agrawal, CEO and co-founder of Bizongo extending the benefits of Udyam (which officially gives start-ups recognition under the MSMED Act) will go a long way towards bridging the major challenges for the sectorsuch as simplifying the process of obtaining required permits, increasing tax exemptions and providing loans on subsidised interest rates.

Fintechs also expect the budget to provide additional support in terms of incentivised lending rates and credit guarantee schemes to microfinance institutions and small finance banks, enabling them to address their financing requirements. Despite government efforts to formalise the sector, a significant portion still operates outside the formal ecosystem, according to industry consensus.

Adoption Of Digital Payments In Tier 2 Cities

Akash Sinha, CEO, and co-founder of Cashfree Payments underscores the significance of extending the adoption of digital payments beyond Tier 2 cities, emphasising that such expansion would not only establish a reliable ecosystem for customers but also facilitate fintech startups in innovating and creating more inclusive and adaptable solutions.

Bipin Preet Singh, co-founder and CEO of MobiKwik adds that to reach enterprises in remote corners of the country, the industry also expects the government to provide tax waiver incentives to fintechs that provide lending solutions beyond tier 2 and tier 3 cities.

The demand for promotion of adoption of digital payments beyond tier 2 and tier 3 cities comes at the time when digital payments have significantly risen in recent years. 

In a recent Rajya Sabha session, union minister of state for finance, Dr Bhagwat Kisanrao Karad had mentioned that total digital payment transactions volume increased from Rs 2,071 crore in FY 2017-18 to Rs 13,462 crore in FY 2022-23 at a CAGR of 45 per cent. He also stated that the nationwide new registered retailer count had increased by 9 per cent showcasing the rise of digital transactions across India with the collective efforts of the government along with all stakeholders. 

Expanding The Scope Of DigiLocker

The Ministry of Electronics and IT had launched DigiLocker as part of the government's Digital India programme, in 2016, as an initiative to provide a secure cloud-based platform for the purpose of storage, sharing and verification of important documents.

Fintech industry has been urging the government to expand the scope of DigiLocker for KYC of individuals and businesses by making the common pool for all forms of digital identity.

Pratik Daudkhane, co-founder of Decentro states that the industry expects the finance minister to signal the government's intent of expanding DigiLocker and its usage and scope.

"Integration of data like credit scores, insurance plans and the Udyam registration status etc. will go long way in making DigiLocker strong digital public infrastructure to not only create a strong KYC for India but also go long way in identifying potential frauds and make the digital financial ecosystem safer," he said.

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