Industries across the country are keenly eyeing the Budget 2022-23 which will be presented by Finance Minister Nirmala Sitharaman. The forthcoming Budget is expected to kindle India’s Capital Expenditure cycle while simultaneously charting out the path towards fiscal consolidation and the post-pandemic economic resurgence. Like other sectors, the fintech sector is also highly optimistic about this year’s budget.
With the pandemic proving to be an unprecedented transformative force across the financial vista, the banking ecosystem is aggressively strengthening its technological capabilities to improve the digital banking infrastructure in the country. Therefore, it is essential that the government budget deploys intrepid policy interventions in this direction to bolster digital banking which in turn will help the economy recover faster.
Let’s look at some Budget 2022 expectations harbored by the financial and business community across India:
POS Terminals and Biometric devices
Both POS terminals and biometric devices are financially, infrastructurally, and operationally more economical and viable than an ATM machine. The Budget should allocate funds and provide incentives like GST-subsidies for the mainstream proliferation of POS terminals and biometric devices as they are the most feasible acquiring framework for both banks as well as financial corporations.
Moreover, offering GST subsidization to merchants who are extending digital payment option in tier 2 regions and beyond to advance the digital on-boarding and digital financing process will also help in accelerating the pan-India financial inclusion movement.
Incentivizing the R&D of disruptive technologies like UPI
The Unified Payments Interface as a homegrown instant real-time payment methodology has proven revolutionary in terms of technology and application. It is essential that the government focuses on reproducing its success by fostering newer and more innovative breakthroughs in this direction. On account of being a diverse country with a vast population, it is essential that we encourage the growth and development of more new-age tech solutions like UPI. The 2022 budget should enable the plethora of active FinTechs and technology start-ups to invest more in R&D and innovation. This will help in launching novel products and traversing into hitherto underserved geographies.
Developing infrastructure or data-security
In today’s digital, everything including data is moving onto the cloud realm. Therefore, in the post-COVID world, the creation of a full-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 amassed across different industries that are growing exponentially, it is imperative to ensure that companies that are striving towards data encryption and improving the overall security infrastructure have access to the necessary fund. Therefore, the government of India must institute a sizable proportion of the Budget for companies that specialize in developing data-security infrastructures.
Incentives for Fintech companies and NBFCs
The government must also support fintech players and NBFCs that are providing small packet loans and digital credit solutions to India’s unbanked or under-banked sections of population. It is critical that these fintech companies are ensured various tax incentives and hassle-free access to funds in this budget as they are assaying important service to the nation.
GST and TDS-cuts for BC networks
It is essential that this budget realizes the need to reduce GST and TDS for the business correspondents (BC) of banking corporations who are instated in rural and remote regions. This will help in bringing down the cost of extending seamless and optimum banking services while also nudging the dawn of a digital economy and enabling the process of financial inclusion across the nation
Lastly, the institution of a separate Fintech wing at the RBI was a great move lauded by fintech stakeholders across the country. The financial community has deep faith in the RBI and is confident that the apex regulatory body will not only encourage innovation across the burgeoning fintech industry but also address the various challenges and growth prospects in a fitting fashion.
(The writer is CEO and Co-Founder, SmartCoin-fintech startup)
