Budget 2019: SME lending, insurance, KYC norms, MUDRA scheme are some desires of Fintech firm; will PM Modi nudge?
The market for small-ticket loans is huge, and Fintech lenders have been working on fulfilling the needs of millions of consumers and SMEs through fast, convenient, and affordable credit.
Budget 2019 expectations: The Budget 2019 is the next big thing for not only Indian citizens but also for Prime Minister Narendra Modi led government who is preparing for a battleground to compete with the opposition parties in the upcoming Lok Sabha Elections. This would be an interim Budget which will be presented by interim Finance Minister Piyush Goyal on February 01. The ruling party once elected for India, will introduce an overall Budget sometime later in the year.
While many sectors are eyeing some good news for themselves, which is why, even fintech industries look forward to some major reforms in their segment especially in regards to tax relief.
Bala Parthasarathy, CEO & co-founder, MoneyTap said, " Digital lending start-ups have emerged as a massive boon for the country in the last couple of years by bringing hassle-free and easy credit to a large unbanked population. The market for small-ticket loans is huge, and Fintech lenders have been working on fulfilling the needs of millions of consumers and SMEs through fast, convenient, and affordable credit."
Parthasarathy added, "With the budget 2019 set to be announced soon, the Fintech industry is expecting the government to focus more on increasing the availability of digital financial services to drive greater financial inclusion and higher growth for the industry."
A few key developments would be expected in the budget this year, as per MoneyTap.
Some regulatory measures that will help the Fintech sector target smoother and faster growth are:
E-KYC/Central KYC: The government should look to introduce a framework for implementing centralized KYC system to provide a conducive ecosystem for Fintech companies, digital lenders, as well as mainstream financial companies to simplify their interactions with consumers and make it more seamless. With the Aadhaar Bill now in the Parliament, we can expect that there will be clarity soon on how digital lenders and Fintech firms can use features like eKYC & eSign. This will enable them to deliver their products and services to more consumers at lower costs while keeping the turnaround time to a minimum.
Developing more open APIs: Financial regulators in the country need to take more steps to promote innovation in the fintech and digital financial services space. For this, they need to work on two fronts. One is building & implementing more open API frameworks that allow Fintech companies to enhance their digital infrastructure and serve more consumers efficiently. Another is to nurture regulatory sandboxes that allow Fintech players to develop new products and services for areas like SME lending or insurance.
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Expanding the Digital India program
The Digital India program has offered several substantial benefits for the growth of the Fintech sector and the overall digital economy. We hope to see new initiatives within this program.
An important step that the government needs to take is to strengthen the Fintech committee formed within the Ministry of Finance during last year’s budget. The committee must work towards designing policies that allow both existing and emerging Fintech players, as well as established financial services firms in the country to facilitate the delivery of paperless and presence-less access to finance for consumers.
Taking measures to boost digital adoption across the country and creating awareness regarding digital financial services like lending and insurance by incentivizing online credit products.
Introducing policies to formalize alternate data sources for credit assessment and decision-making by establishing new variants of traditional credit bureaus or expanding the scope of activities permitted to the existing ones.
Parthasarathy also expect the government to take necessary measures on data protection given the increasing focus on digitization of the economy. Policies related to data privacy and security will go a long way in strengthening the impact of the Digital India program while providing the Fintech industry a concrete framework to operate with.
In addition, Parthasarathy also hope the government considers expanding the scope of services under the MUDRA scheme and other existing credit guarantee schemes to cover Fintech so that the sector can help boost credit supply within the country.