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Opportunities during COVID for Indian FinTech - PwC India

Implications for the FinTech segment

The Government of India (GoI) has announced a comprehensive financial package for non-banking financial companies (NBFCs) and micro, small and medium enterprises (MSMEs), to infuse liquidity in the sector amidst the COVID-19 crisis. As part of the package, MSMEs can avail INR 300,000 crore in the form of collateral-free loans, INR 20,000 crore of subordinated debt and INR 50,000 crore equity infusion through fund of funds. This package is expected to strengthen the MSME segment and provide it with necessary capital. FinTechs, owing to their unique position in the economy, can leverage the opportunity as users of funds, act as enablers in efficient disbursement to NBFCs and MSMEs, and play a critical role in building an ‘Atmanirbhar Bharat’ (self-reliant India).

Key announcements

Implications and opportunities for FinTechs

The disruptive power of flow-based lending

Key announcements

E-marketplace data to drive transaction-based lending through FinTechs

E-marketplace data to drive transaction-based lending through FinTechs

Implications and opportunities for FinTechs

Enabled by data from the Government e-Marketplace (GeM), FinTechs such as lending firms, payment firms and neobanks can develop end-to-end solutions to disburse funds to MSMEs through digital channels.

Key announcements

Online lending marketplaces and account aggregators

Online lending marketplaces and account aggregators

Implications and opportunities for FinTechs

An online lending marketplace, conceptualised by a software think tank and a non-profit collective of account aggregators, is planned to be launched by the government and is uniquely placed to usher in an era of data-driven lending for MSMEs.

Key announcements

Integration of GeM with the Trade Receivables Discounting System (TReDS

Integration of GeM with the Trade Receivables Discounting System (TReDS)

Implications and opportunities for FinTechs

The integration of TReDS and GeM, announced in February 2020, presents a significant opportunity for lending FinTechs to offer supply chain finance products to MSMEs working with public sector undertakings (PSUs) and Government departments.

NBFC FinTechs to benefit from liquidity infusion

Key announcements

Liquidity facility and partial credit guarantee scheme for NBFCs

Liquidity facility and partial credit guarantee scheme for NBFCs

Implications and opportunities for FinTechs

  • The GoI has announced the establishment of a credit facility worth INR 30,000 crore for NBFCs/housing finance companies (HFCs)/microfinance institutions (MFIs), along with a partial credit guarantee scheme (in addition to the one announced in December 2019) worth INR 45,000 crore for NBFCs. 
  • The liquidity infusion is expected to significantly benefit FinTechs that have NBFC licences and are operating in the lending space.
  • Early-stage FinTech entrepreneurs will also benefit from the immediate tax refunds announced for proprietorships and partnership firms.
     

Key announcements

Multiple liquidity infusion measures for MSMEs

Multiple liquidity infusion measures for MSMEs

Implications and opportunities for FinTechs

  • INR 300,000 crore collateral-free automatic loans for MSMEs
  • INR 20,000 crore of subordinate debt and INR 50,000 crore equity infusion through fund of funds
  • FinTechs, enabled by their last-mile reach across India, can utilise their digital technologies to become the primary lenders to MSMEs.
     

FinTechs enabling an Atmanirbhar Bharat (self-reliant India)

Key announcements

Demand for COVID-19 specific products
Demand for COVID-19 specific products
Demand for COVID-19 specific products

Demand for COVID-19 specific products

Implications and opportunities for FinTechs

  • COVID lending: Lending FinTechs have an opportunity to provide COVID-19 specific loans with flexible repayment options to help credit-worthy businesses and individuals get access to credit to meet their short-term liquidity requirements.
  • COVID insurance: Insurance products providing coverage to COVID-19 patients are expected to witness a significant rise in demand owing to the Atmanirbhar Bharat mission. FinTechs can leverage their digital insurance delivery mechanism to remotely provide COVID-19 specific insurance policies.
  • WealthTech: The COVID-19 crisis and the resultant stock market volatility have enabled digital discount brokers to acquire new customers. 
  • Digital wealth management and advisory solutions have the opportunity to help customers and independent financial advisers (IFAs) navigate market uncertainties.  
  • Enabling tech: The increased demand for remote operations in the wake of the COVID-19 crisis is expected to give fillip to FinTechs providing software as a service (SaaS) solutions.
  • Digital tech solutions such as video-based know your customer (KYC), chatbots and digital operations would see a surge in demand from banks and NBFCs.
Authored by Sanjana Agarwal

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Sanjeev Kumar

Sanjeev Kumar

Associate Director, FinTech & Innovation Strategy, PwC India

Avneesh Singh Narang

Avneesh Singh Narang

Associate Director, FinTech and Innovation Strategy, PwC India

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