By Bipin Preet Singh
As India prepares for the 11th Budget under Finance Minister Nirmala Sitharaman, the expectations are high for a document that not only charts the nation’s economic recovery but also drives future growth. With the economy rebounding with 8.2% GDP growth in FY2023–24 post-COVID, this Budget assumes critical importance, especially for the burgeoning fintech sector poised for its next phase of evolution.
India’s fintech landscape has been reshaped by rapid digital adoption, driven by initiatives like the Jan Dhan, Aadhaar, and Mobile (JAM) trinity and Unified Payments Interface (UPI). These innovations coupled with supportive regulatory frameworks have propelled digital financial services to new heights. The projections indicating that smartphone users will surpass 1.1 billion by FY26 and over 850 million internet users highlight India’s swift transition to a mobile-first economy, particularly in financial services.
The National Strategy for Financial Inclusion 2019-2024 emphasizes bridging gaps in traditional financial services for underserved populations. Fintech firms are pivotal in expanding digital infrastructure to rural areas, ensuring universal financial access. Targeted subsidies can further drive innovations for low-income groups, balancing commercial success with social impact.
Access to financial services stimulates investments, reduces economic vulnerabilities, and supports employment. However, many MSMEs and households in emerging metros and small towns lack access to credit due to sparse banking facilities. Therefore, enhancing financial service accessibility is crucial, supported by robust MSME credit flows and incentives for small banks. This is where initiatives like the Rs 22,137.95 crore allocation in the Interim Budget highlight potential fiscal impacts on MSME growth and digital integration.
Fintech firms are expanding beyond basic payment solutions into sectors like insurance, personal finance, and digital gold lending to broaden service portfolios. Neobanks and ecosystem banking models are emerging to deliver comprehensive financial services to consumers and businesses alike. InsurTech is another rapidly growing segment within fintech, offering significant market opportunities. Similarly, alternative investment platforms are also gaining traction, providing new avenues for retail investors to engage with capital markets.
In line with the consistent evolution of the fintech sector, regulatory clarity emerges as a linchpin for sustained growth and innovation. The Budget’s role in addressing regulatory uncertainties and building an enabling environment for over 6,000 fintech firms will fuel sectoral expansion while safeguarding consumer interests.
This alignment also presents a unique opportunity to integrate the Digital India initiative with fintech’s transformative potential, nurturing resilience, promoting innovation, and driving inclusive economic growth. Moreover, initiatives such as the Open Credit Enablement Network (OCEN) and unified KYC frameworks are pivotal in streamlining operations, reducing compliance costs, and enhancing overall efficiency across the industry.
In addition, collaborations between Public Sector Banks (PSBs) and fintech firms also present opportunities for sectoral growth. Leveraging PSBs’ reach with fintech’s technological prowess through strategic partnerships can amplify financial inclusion efforts and bolster customer engagement. Also, government-driven investment in AI-driven solutions can help bridge language barriers nationwide, resulting in significant economic opportunities in rural areas while transforming customer service and efficiency across urban India.
As the Budget nears, expectations are high for measures unlocking fintech’s full potential. With strategic policies and investments, the government can pave the way for an advanced, inclusive, and integrated fintech ecosystem, driving substantial economic and social progress.
Bipin Preet Singh is the Co-founder & CEO of MobiKwik. Views expressed are personal. Reproducing this content without permission is prohibited.