Industries across the country are watching closely the 2022-23 budget to be presented by Finance Minister Nirmala Sitharaman. The upcoming budget is expected to rekindle India’s capital spending cycle while simultaneously charting the course for fiscal consolidation and post-pandemic economic resurgence. Like other sectors, the fintech sector is also very optimistic about this year’s budget.
As the pandemic proves to be an unprecedented transformative force financially, the banking ecosystem is aggressively building up its technological capabilities to improve the digital banking infrastructure in the country. Therefore, it is essential that the government budget deploys bold policy interventions in this direction to strengthen digital banking which, in turn, will help the economy recover faster.
Let’s take a look at some expectations of the 2022 budget nurtured by the financial and business community across India:
Point of sale terminals and biometric devices
POS terminals and biometric devices are financially, infrastructurally and operationally more economical and viable than an ATM. The budget should allocate funds and provide incentives such as GST subsidies for the proliferation of point-of-sale terminals and biometric devices, as they are the most feasible acquisition framework for banks and financial firms.
Additionally, offering a GST subsidy to merchants who expand the digital payment option in Tier 2 regions and beyond to advance the process of digital onboarding and digital finance will also help accelerate the pan- Indian Financial Inclusion.
Encourage R&D of disruptive technologies like UPI
The Unified Payment Interface, as a real-time instant payment methodology, has proven to be revolutionary in terms of technology and application. It is essential that the government focus on replicating its success by promoting newer and more innovative breakthroughs in this direction. As a diverse country with a large population, it’s critical that we encourage the growth and development of newer technology solutions like UPI. The 2022 budget should allow the plethora of active FinTechs and tech start-ups to invest more in R&D and innovation. This will help launch new products and cross hitherto underserved geographies.
Develop infrastructure or data security
In today’s digital world, everything, including data, moves into the realm of the cloud. Therefore, in the post-COVID world, creating a fully-fledged digital infrastructure for data security will prove to be the ace of spades. If we look at the amount of data being generated and accumulated across different industries that are growing exponentially, it is imperative to ensure that companies striving to encrypt data and improve the overall security infrastructure have access to necessary funds. Therefore, the Indian government must institute a significant portion of the budget for companies specializing in the development of data security infrastructure.
Incentives for Fintech companies and NBFCs
The government should also support fintech players and NBFCs that provide small package loans and digital credit solutions to unbanked or underbanked segments of the population in India. It is essential that these fintech companies benefit from various tax incentives and hassle-free access to funds from this budget, as they provide an important service to the nation.
TPS and TDS discounts for BC networks
It is essential that this budget realizes the need to reduce the GST and TDS for business correspondents (CB) of banking companies that are located in rural and remote areas. This will help reduce the cost of extending transparent and optimal banking services while pushing the dawn of a digital economy and enabling the process of financial inclusion across the country.
Finally, the institution of a separate Fintech wing at the RBI was a great move hailed by fintech stakeholders across the country. The financial community has deep confidence in the RBI and is confident that the supreme regulator will not only encourage innovation in the booming fintech industry, but also address the various challenges and growth prospects in an appropriate manner. .
(The author is CEO and co-founder of SmartCoin-fintech startup)
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Posted: Monday, January 31, 2022, 1:04 PM IST