India is among the fastest-growing fintech markets in the world. In fact, an Invest India report stated that the Indian fintech industry was valued at $50-60 billion in 2020. And it is projected to reach $150 billion by 2025. The same report revealed that FinTech transaction size is estimated to grow at a compound annual growth rate (CAGR) of 20 percent from $66 billion to $138 billion between 2019 and 2023. While this amazing growth trajectory is laudable, it is also a matter of concern. Though the fintech sector has risen amidst the pandemic like a phoenix reborn from ashes, it still requires a push from the government to continue its upward momentum.
Here are a few expectations of the fintech industry from the upcoming Union Budget 2022:
E-registrations for proprietorship and partnership firms
Building business credit plays an instrumental role in the company's financial backing abilities. As opposed to this, there is no legal or financial split-up between a person and their business in a sole proprietorship. It is pertinent to note that, whether one entity operates as a limited liability or corporation, it has the power to establish a separate file from the owner as an individual. However, to make this complex process easier and more convenient, the government should start e-registrations for proprietorship and partnership firms. It would help businesses with better credit penetration to fortify their positioning.
Assistance to register a business as a digital nomad
The onset of COVID-19 restricted travel to a large extent and forced people to work, study and communicate for whatever reason from within their homes. After spending months inside the four walls, many employees began searching for digital nomad companies. The augmentation of cutting-edge technology, flexible working hours, remote working opportunities, or plain freelancing has boosted this trend.
Traditional job holders have tasted the essence of independent, flexible working hours. Instead of staying at one place following a fixed schedule like humanoid robots, these workers have been unleashed and are unlikely to return to their old routine. Owing to this trend, many businesses are gearing up to register as digital nomads. However, considering the complexities of the registrations process, most companies face chaotic challenges. Considering the new-age requirements, the government should ease the registration process for companies trying to adopt the digital nomad concept and assist them in rising against the tide.
Easing KYC norms for modern-age businesses
The amended RBI rules have incorporated offline KYC norms in the last few years. However, from businesses' and corporations' perspectives, a few obstacles regarding ease of use still remain. At present, there are two methods to complete KYC online—first, Aadhaar OPT, and second Aadhaar-based biometric. The OTP method completes the KYC process within a few minutes. In contrast, the biometric process takes some time as one has to first apply for KYC online, and afterward, an executive from KYC Registrations Agency will visit their home or office to conduct verification. With the exponentially growing number of online transactions and authentication requirements, complex KYC norms are proving to be stumbling blocks to a firm's smooth journey. It’s expected of the central government to facilitate the sector by easing KYC norms.
Open data for all business registration ids
Open data for all business registration ids at one platform for business entities like LEI, GST, IEC, PAN, CIN, and others. This Open Data will help Banks, Institutions and others to know this entities in better way.
Linkage of LEI with other registration IDs
Legal Entity Identifiers (LEIs) are required for all banks, investment companies, brokerages, insurance firms, trading companies, credit unions, and other enterprises providing financial products and services. To be precise, it is mandatory for all legal enterprises that take responsibility for financial transactions comprising its market proceedings. In this context, the government should promote the linkage of LEI with other registrations of Identity Documents (IDs) to assist regulators and banks in gaining a better in-depth understanding of potential partner companies. Furthermore, in the fast-paced and technology-driven world, financial institutions generate a stark amount of data that appeals for scaled-up transparency. Therefore, it is all the more critical for LEI functions to become an integral part of the identification system as it ensures a secure and transparent approach.
Fintech and LEI registration has picked up pace in the past few years. However, the sector expects some relief, incentives, and support in the form of the aforementioned measures. With the right policies/amendments and effective implementation, the sky's the limit for this niche sector.
(The writer is Chief Executive Officer at LEI Register India)