By Vivek Belgavi
Budget 2019: This year’s budget is going to be a key milestone in the government’s continued push for digitisation and in ensuring the continuity of the various schemes it has announced in the past. A lot of announcements and endeavours in other sectors apart from financial services will affect the fintech industry directly or indirectly. A lot of opportunities can be opened up for small and large players in the industry. A few key developments in areas we think the industry can expect from this year’s budget would be:
Digital India – Thanks to the overall digital India program there have been innumerable benefits which have driven the digital economy and FinTech growth. We hope to see initiatives within this umbrella program being given more impetus. A few announcements the industry would like to see include:
- Strengthening of the fintech committee that was constituted as part of the Ministry of Finance in the last budget. The committee should work towards designing policy to make India the top hub for fintech innovation in the world by ensuring fast-track paperless and presence-less access to finance.
- Driving digital adoption and awareness through incentivisation of online credit products similar to those present for insurance policies
- Encouraging financial planning by doubling deductions permitted for home loan interest and having a separate deduction for term life insurance and ELSS mutual funds independent of Section 80 C.
- Provisions for further development of acceptance infrastructure and digital payments instruments.
- Policy for formalising alternate data sources for credit decisioning through the establishment of the new type of bureaus or expanding the role of existing bureaus.
- Programs for digitisation of ecosystems like healthcare, education, traffic and transportation. Some of these help in the formalisation of different parts of the economy and thus create markets for fintech services, for example, e-commerce has led to the formalisation of a lot of SME merchants and enabled extending lines of credit to them.
Regulatory aspects – From a regulatory standpoint there can be a number of measures that can help fintech businesses flourish:
- Electronic KYC/Central KYC – A framework for implementation of central KYC system for financial services that can help create an ecosystem to enable consumers as well as financial services firms to interact with each other seamlessly.
- Open API and regulatory sandbox – India’s financial industry needs its regulators to gear up and help them nurture innovation. Two key initiatives that need to be driven hand-in-hand are the implementation of open API frameworks and setting up of a regulatory sandbox.
- Data protection – With increasing focus on digitisation it is important that data protection is taken into account. We hope to see an increased focus on data privacy and protection as well as part of the overall Digital India program.
Education policy – The fintech sector requires a workforce skilled in business, finance, technology and regulations in varying degrees. There is an expectation that the budget accommodates for an inclusive education policy that enables growth of educated Indians across all levels along with special provisions for skilling in specialised technologies and funds for research in emerging technologies.
Recognition – Another key announcement we hope is that financial services sector is recognised as another priority sector along with the other five (healthcare, agriculture, education, infrastructure, and transportation) that were enlisted under the Artificial Intelligence strategy being outlined by NITI Aayog.
(Vivek Belgavi is partner & leader – fintech at PwC India. Inputs from Aiman Faraz, assistant manager at PwC India. Views are the authors’ own).
