'All compliances like GST and other taxes should be handled through a single window'
ByNitin Misra, Co-founder, indiagold
"With the government making progress on several fronts, we anticipate a policy framework in the Budget that allows FinTechs to work closely with relevant government institutions to improve the distribution and adoption of existing gold monetization schemes, as well as launch new products like the gold savings account. All compliances, including incorporation, GST, other taxes, EPFO, and other registrations, should be handled through a single window in India.
To stimulate entrepreneurship in India, the government should also allow entrepreneurs to carry forward their loss of income to offset future income. Furthermore, reduced capital gains on mergers and acquisitions will help the sector grow."
'Boost liquidity flow to NBFCs, FinTech companies'
BySudhesh Chandrasekar, Chief Financial Officer, slice
The NBFC sector has witnessed a liquidity crunch in the last few years. Therefore, boosting the liquidity flow to fintech and smaller NBFCs focused on consumer credit would be key to reviving economic growth and putting the economy back on a double-digit growth rate trajectory. In a bid to ease lending, the government also could promote banks to specifically fund fintech and smaller NBFCs which are furthering financial inclusion in the retail segment. Another welcome move could be the Extension of tax sops on MLDs which has the potential to increase the flow of capital to the fintech space. The government’s policies can also be helpful in promoting the flow of overseas capital by easing the requirements and thresholds for Indian debt instruments. Similar to credit guarantee schemes for Micro and Small Enterprises (MSEs), I'm hoping the Government would look at credit guarantee schemes for retail borrowers to boost retail demand.
'Digital infrastructure boost needed for financial services'
By Sumit Gwalani,Co-founder of Fi
This year's budget offers an opportunity to shrug off the impact of the third wave and push the economy towards higher growth. Throughout the last year, we’ve seen that more individuals are keen to take part in India’s capital market success. To enable them, digital infrastructure for financial services from banking and payments to credit, investment, and wealth management needs to reach the last mile.
While the Reserve Bank of India has set the regulatory ball rolling for innovations like UPI and Account Aggregator, the Budget can encourage the uptake of these technologies in the financial sector through partnerships with digital service providers either by direct funding or tax incentives. The government has taken strides towards financial inclusion through the implementation of the JAM trinity concept. This in combination with regulatory support in the form of digital banking licenses, fintech can play a major role in India's growth trajectory.
'Budget must bridge financial gap for FinTech companies'
By Vishal Bhatia, CFO,TrueBalance
Fin-tech companies and small NBFC's have high expectations from this year's Union Budget. I am hoping for the budget to dive deeper into the FinTech system and push the community for bridging the financial gap between the users and financial institutions. As part of our core belief, we want personal finance to be accessible for everyone from any part of the world as ‘digital finance’ is the new way of living post-Covid-19. Ahead of the budget, we are positive that along with slight relaxation on the taxes, liquidity support from bigger banks and the government will help keep the cash inflow for smaller NBFC’s. All these focus points will help us go the extra mile and elevate funding along with credit allocation to theend-user.
The need for licensed digital banks
By Anurag Sinha, Cofounder & CEO, OneScore & OneCard,
“The Fintech space has not only accelerated the ‘Digital India’ initiative by years but introduced an array of new-age platforms powered by super apps offering multiple services through few swipes on a mobile - significantly influencing digital adoption across the spectrum including payments and credit. While the pandemic triggered a steep rise in demand for consumer credit, it also highlighted the lack of credit penetration in the country. However, given the rise of smartphone usage, shift to digital avenues and the increasing number of digitally-savvy consumers, licensed digital banks can effectively enhance reach and bridge this gap. A digital bank license regime will therefore enable fintechs to leverage their tech-stack optimally to create credit products and user experience which will redefine the investment and consumption landscape in the country.”
'With a robust mechanism in place, 2022 would be the year of mainstream crypto adoption'
By Gaurav Dahake, Founder & CEO, Bitbns,
“From the upcoming union budget, we expect clarity in terms of how crypto transactions will get regulated. There have been many discussions going around in the crypto space; however, no concrete output so far. As an exchange, we have been working on this along with the finance ministry, creating favourable regulations. We have shared deeper insights and statistics that showcase the size of the industry, the scale, and the growth rate it offers. How critical it is to various vital pillars of the economy, including employment creation and how people have been interacting with different crypto products that would ultimately help grow the Indian economy. Therefore, with the upcoming union budget, we expect detailed clarity on how it will be regulated and an introduction to a tax regime that would be more fruitful. 2021 was the most significant year in terms of how things shaped up for the crypto industry in India and as a crypto community. With a robust mechanism in place, 2022 would be the year of mainstream crypto adoption.”
'A regulatory body to oversee payment recovery is the need of the hour'
By Bhavin Patel, Co-founder & CEO, LenDenClub,
“The economy is projected to gradually return to its previous trajectory, with fiscal priorities in the upcoming budget invigorating it. A regulatory body to oversee payment recovery is the need of the hour. An enhanced procedural aid to the legal recovery of repayments from digital borrowers to further protect the rights of those who lend money. Such a specialised government vehicle to oversee fintech could not only help startups run more effectively, following compliance requirements, but it would eliminate possible fraudsters.
Returns from investments in Peer-to-Peer (P2P) Lending could be exempted from tax under Section 80C of Income Tax law, or a different provision could be carved out to reduce tax rates such as tax exemption for gains below Rs 20,000. This will encourage people across geographies to invest in P2P lending, making funds accessible on multiple platforms. P2P lending plays a significant role in empowering small businesses in India. Tax benefits in P2P lending will magnify the growth of businesses when capital from P2P platforms is diverted to the sector.
The pandemic has resulted in significant job losses, primarily due to people's inability to keep up with evolving technology. The way the government is spreading awareness is remarkable. Further to that, setting up avenues for advanced technical education, for instance, could help it drive so much further. Presently, India requires professionals with technical and financial competence to conduct the Fintech revolution. More institutions that provide formal education and certifications are needed to create a skilled group of individuals required to grow P2P lending platforms and the Fintech industry.”
'Hope that TDS for income below Rs 50,000 a year can be waived off'
By Anand Kumar Bajaj, Founder, MD & CEO, PayNearby,
“The digital payments space has proved its mettle as a stable growth avenue during the pandemic. A positive impact was seen on digital payments due to benign taxation for self-service digital customers. To ensure the same benefits reach the less-savvy citizens, our government could waive GST and TDS for financial inclusion services at Business Correspondent (BC) outlets across India. A GST and TDS waiver will help reduce the cost of offering seamless financial services and help high-end tech reach the technology-oblivious segment. We stand with the government's intent of taking digitisation to the last mile and passing the GST waiver benefit to end-users as this will push for greater financial inclusion and a digital economy in the country.
Moreover, low-income citizens are mostly catered to by low-earning retailers who barely cross the value of taxable income, and hence, do not file IT returns to claim a refund of TDS. Thus, TDS is only a cost to them and not a refundable deduction because they do not know how to take a refund by filing returns. We sincerely hope that TDS for income below Rs50,000 a year can be waived off. We are positive that this Budget will consider the grim working condition of the BC network and make the needful regulatory changes to ensure the viability of a community that has been vital in driving the cause of financial inclusion and democratisation of digital payments in the country.”
'The budget must include bold policy interventions to build digital infrastructure'
By Mandar Agashe, Vice-Chairman & MD, Sarvatra Technologies Ltd,
"There have been positive signs of economic recovery following the pandemic's severe crisis. The government's ongoing push has resulted in greater adoption of digital payments methods like UPI, AePS, QR codes, and others, and individuals have become accustomed to transacting digitally. Digital payments can expand their network to further parts of the country, and to do so; the budget must include bold policy interventions to build digital infrastructure, which will eventually aid in the digitization of the entire economy.
Since the country only has 5.2 million active POS machines, the budget should include tax incentives to encourage the use of PoS/Micro ATM devices, which are significantly more cost-effective and infrastructure-wise less demanding than ATMs. Further, the sector would welcome a GST exemption for merchants who accept digital payments; this measure will encourage further digital adoption, particularly in semi-urban and rural markets, where digital payments are still scarce.
In the end, we would hope the budget put a special emphasis on advancing the country's FinTech ecosystem as the FinTech industry can boost India's economy to the position it deserves."
'Consider allowing financial institutions to claim 100% tax deduction for bad debt provisions'
Budget that drives growth for gaming industry and regulation of online gaming and betting
By Vaibhav Odhekar, Co-Founder & COO at POKKT
"We expect the Union Budget 2022 should drive growth for the gaming industry by creating special gaming zones, increasing FDI limits and providing subsidies on employment and tax waivers for 3 years. We also propose online gaming and betting should be regulated following proper KYC norms, enabling a boost in the economic growth of the country. We also suggest that companies providing cloud hosting services should be provided relief on GST."
Budget focused on rapid growth across AI and innovation, while also laying foundational rails for growth and resilience
By Amit Das, Co-founder and CEO of Think360.ai
"As a growing startup focused on financial services, AI and innovation, we hope this year’s budget is focused on rapid growth across these sectors, while also laying down some more foundational rails for continued growth and resilience.
1) Budgetary provisions for foundational data and information technology infrastructure – these rails, over the next decade, will unlock significant opportunities for growth and economic development, and an opportunity for us to be the next world leader. They are essential for cross-country distribution of opportunities, capital, wealth, and growth.
2) Setting up focused financial institutions and sandboxes that drive innovation, and drive public-private partnerships. The benefits of these lead to a chain reaction of opportunities. For example, bringing private innovation indirectly benefits transfer through blockchain and digital currency-led innovations.
3) More sustained economic boost to priority sectors while bringing in accountability and speed - productivity linked grants, prioritization of initiatives that show greater measurable results, and thus making more funds available to them.
4) Leveraging the 'Make in India' platform for driving low-cost remote productivity centers – special remote economic zones with great wifi, office infrastructure, low-cost manufacturing driven by design excellence and local raw materials/ sensibilities. We need to create many Bengalurus and Hyderabads in India, in the wake of this new remote-workforce-led reality."
Government support from a KYC Regulation standpoint which could help in mitigating banking risks in 2022
ByDeepak Bhawnani, Founder and CEO, Alea Consulting
“Most financial institutions/banks require customers to submit address proofs, including permanent and current residence. The need to provide such documentary proof and lack of flexibility can impact marginalized or weaker sections of the population. Overstress on address proof can thus be avoided. The regulatory framework and implementation of electronic and video KYC onboarding of customers should be emphasized to drive efficiency. Technology advancement must further substantiate this to create a CKYCR (Central KYC registry), a repository of customer KYC information”.
“Many financial institutions struggle to access a single source of information that helps them develop a comprehensive view of each client. They can be lent support to address poor data quality. For corporations, traditional onboarding is time-consuming, labor-intensive, manual and prone to error due to manual input. Implementing an automated corporate verification solution powered by AI technology provides an opportunity to enhance the efficiency of the corporate onboarding process in terms of both speed and cost reduction”.
Fintech firms demand further liberalisation of tax regime in Budget
The fintech industry has urged Finance Minister Nirmala Sitharaman to further liberalise the tax regime for financial sector startups in the forthcoming Budget, arguing that it has an immense potential to promote financial inclusion and generate significant employment opportunities.
Rise in households' inflation expectations impacts bank deposits: RBI paper
When sentiments about future inflation are on the higher side, households change their savings portfolio with respect to bank deposits, according to a working paper released by the Reserve Bank of India (RBI) on Tuesday.
Hello readers and welcome to sector-wise coverage of Union Budget 2022. With Finance Minister Nirmala Sitharaman set to present the Modi government's eigth Budget on February 1, track this blog to know what the banking and finance sector is expecting this year. Stay tuned for live updates.