Budget 2017, the most important episode for the corporate sector and citizens of India of the year 2017 is around the corner. The corporate world is eyeing the budget with great expectations and apprehensions. However, there is no space for illusions in the real world, as people cannot trust on magical illusions to invest their money.The government of India is currently high on the start-ups and so are the Indian and global investors. All these factors coupled with good technological innovations in our country are creating an ecosystem which can support and blossom the start-up sector in our country to a great extent.
The budget 2017 is fast approaching, and as usual some sectors will be benefited and some will not be to a great extent. However, not too many people will be surprised to know that the most benefited sector would be the Financial Services sector. In the concluding months of the last year, the sector was bugged by demonetization, which adversely affected the sector. However,this highly regulated sector is expected to undergo major reforms this year post budget. The last universal banking license was granted to IDFC & Bandhan bank, while payments and small banks outdo the number of licensing number by miles, the growth prospects in the financial sector are still immense.
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The government is expected to come out with benefits, regulations and opportunities for all financial players. Most people believe that it is the race is to a cashless economy, while this may sound superficially awesome, but challenges of rural connectivity and the fact that still according to the World Bank only 53% Indians have bank account poses a huge challenge. Although, due to the enormous population strength of 1.3 billion people, even a 60% penetration is enough for the companies to succeed.The government’s motive is to reach to the entire population, but the financial companies’ gains lie in the higher transaction volume, average transaction value, deposits and loans.
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Financial companies, financial tech companies, payment banks, NBFCs and banking corporations are the ones to gain business momentum from the budget 2017, with an early budget this year, 2017 is turning out to be an exciting year for the start-ups, especially for the fintech sector. The government has announced a lower presumptive rate of interest on the payments which are digitally received by the government; this is another move by the government to promote digital transaction and a step further to reach to its goal of achieving the cashless economy. This announcement by the government has given another boost to the fintech firms, which are already riding high since the demonetization move by the government.Personal finance is still lagging behind compared to the other sectors in the finance space; it is in desperate need of innovation and government support. Lowering the interest rates will definitely help the sector to prosper and can witness some of the new players entering in the sector, which will help to strengthen the sector.
Post demonetization, the upcoming union budget 2017 has high expectations riding on it, this is the testing situation for the government and people alike. People are waiting for the budget hoping for a chilled splash of cold water after suffering the burn from demonetization. The irony of the situation is that unlike many other sectors demonetization has helped to make the finance service sector, especially fintech stronger than it was pre demonetization era. The budget is expected to strengthen the sector further.
(The article has been written by Rohit Chokhani, Principal Founder, White Unicorn Ventures. All the views expressed are personal)