What Budget 2023 Can Do To Aid The Fintech Market Reach $200 Billion in Revenue By The Year 2030

What Budget 2023 Can Do To Aid The Fintech Market Reach $200 Billion in Revenue By The Year 2030

The Indian finetech sector has observed persistent growth over the years and now plays a significant role steering the development of the economy. The sector of finetech is bridging the gap by availing digital payments, banking and loans to the last mile customers. Digital transactions happen to have become smooth across the country due to the launch of products like UPI. 

India’s market of finetech is anticipated to reach $200 billion in revenue by the year 2030 from $50 billion in 2021, as per an EY report. The report also says it is anticipated to have assets under management of $1 trillion by the year 2030. 

As per the data from the National Payment Corporation of India (NPCI), in the year 2022 the total number of UPI transactions witnessed a rise of 91.11%. In order to help further reach the masses, NPCI introduced UPI 123 previous year, which has a feature which enables phone users to make payments digitally without the access to the Internet. 

A technology provider for the banking sector, Sarvatra Technologies Founder and MD Mandar Agashe stated that the banks are introducing offline payments through feature phones with assistance from NPCI as the coming user base in UPI will come from these users. 

The forthcoming budget should further encourage these services that will add to financial inclusion. Mander Agashe recommends that at the village level or gram panchayat, self-help groups ( SHGs) can be persuaded to encourage the use of offline payments through UPI. 

According to him, it will help in the growth of UPI. The confidence of the general public will start rising when SHGs start using the offline mode of payment through UPI. If incentives are given to SHGs for doing digital payments, that will prove to be a big game changer in the last-mile village. 

Financial inclusion has always been the top priority in the budgets previously as pointed out by Agashe. He anticipates the momentum to continue in the digital payment sector. 

Many fintech have emerged since the last couple years, with the aim of financial inclusion. One such fintech company is PayNearby, which partners with micro entrepreneurs for instance kirana shops to provide financial services. 

There has to be some benefits of tax for fintechs who are into financial inclusion, says Anand Bajaj, MD and CEO of PayNearby. In six lakh villages there are only 32,000 bank branches, and the financial inclusion gaps here are bridged by the banking correspondents. Bajaj also adds that the GST on financial services should be about 5% contrary to 18%. 

Simultaneously, the non banking finance companies ( NBFCs) who digitally operate have also become a crucial part of the lending ecosystem in India. They played a crucial role in enabling large numbers of people to get easier access to formal credit. 

Nonetheless, the challenges lenders have been facing since the last couple of years did not spare NBFCs too. The segment has been experiencing challenges regarding liquidity for a while and it has deepened because of the IL&FS crisis.

VIVIFI India, Founder and CEO, Anil Pinapala, an NBFC stated that they have hoped every year that the budget will fill more liquidity into the system of NBFC. 

It will prove to be a great initiative if the minister of finance can prescribe some norms in the Budget that will make sure the main banks fill liquidity into the system through NBFCs and extend credit access.

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