Here are some budget expectations from the new government, from the perspective of fintech lending companies:
Tax sops: A noteworthy benefit that the budget can offer to fintech companies is in the form of tax sops. Many fintech lenders are operating on thin margins and reducing their tax burden can be a highly advantageous and encouraging move by the government. Well, the government is already offering tax holidays to early-age startups through its flagship Startup India Programme. Extending tax holidays by a few years to startups, which include fintech companies, is very much a welcome move. Another move in this regard would be to offer income tax benefits and reduce PF/pension compulsions to employees of early-age fintech startups. Lesser regulatory interference: It is a proven fact that unnecessary and undue regulatory interference can cause hiccups in the growth metrics of companies – this is particularly true in the case of fintech lending companies, as these companies deal with offering credit and providing financial solutions, while also dealing with large chunks of important consumer data. Information security is a key element of focus, and coupled with financial services, the combination can be subject to significant regulatory interference. The Reserve Bank of India recently announced the inception of the Sandbox project, an environment that allows fintech lending companies in India to test disruptive technologies on a protected dataset and carry-out processes with minimal regulatory influence. This is certain to offload the burden of irksome regulatory influence, and allow fintech companies to operate more freely, test new technologies, and rectify technical inconsistencies to avoid pernicious fallouts when dealing with larger and potentially massive datasets. Access to funding: Many fintech startups in recent times have suffocated owing to lack of channels to draw funding. For any startups, funding is a crucial pre-requisite, and can be the one cause that determines success or failure in the long run. Although there has been notable progress in creating effective channels from where startups can raise funds, the government can also go one-step further to allocate a resource fund that aims to particularly fund financial startups, helping them scale-up quickly, reach a greater number of consumers, and essentially improve the quality of service delivery. Encouraging technological advancements in the field: Many a time, a certain industry segment is far more developed in other countries and is still in the nascent stage in many other countries. This can be attributed to a lack of awareness on potent technologies that certain companies in developed countries are leveraging to achieve astounding results. An impressive move by the government would be to spend more on research and technology to help evolve powerful tech frameworks, while also keeping an eye out on various advancement in the field that are taking place in other developed countries that are leveraging powerful technology tools to amplify the seamlessness of their processes.
Fintech startups in recent times have played a key role in driving credit penetration in India. A large section of initially underserved individuals can now get super-quick and convenient access to credit, thanks to fintechs that are now active in over 900 locations across the country. Even individuals with subprime credit scores, those who’re currently employed with Category C and Category D companies (blue-collared workforce), and those with low-to-mid level incomes, are now getting swift and fair access to credit facilities.
Aditya Kumar is Founder and CEO of Qbera.com.