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Navigate India’s Fintech Future with Budget 2024

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TLDR:

  • India’s fintech sector is expected to contribute an additional $400 billion to the national economy in the next seven years.
  • The budget is expected to focus on meeting the needs of MSMEs, with incentives for microfinance institutions (MFIs) and small finance banks (SFBs).
  • There is an expectation for enhanced digital public infrastructure, including partnerships between fintech players, public institutions, banks, and NBFCs.
  • Sustained investments in local computing power and AI applications development are anticipated.
  • The Digital Lending Association of India (DLAI) expects a dedicated fintech credit fund to support small and medium-sized fintech companies.

India’s fintech sector is set to make a significant contribution to the country’s economy, with expectations that it will add $400 billion in the next seven years. The upcoming budget announcement is eagerly awaited as it is expected to support the continuous progress of the fintech industry. One area that is likely to receive attention is MSMEs, with a focus on ensuring a smoother flow of credit. This could involve incentives for microfinance institutions and small finance banks, as well as support for digital lending players that operate in remote areas of the country. The aim is to leverage the potential of fintech to boost the MSME sector.

The budget is also expected to encourage partnerships between fintechs, public institutions, banks, and NBFCs, particularly in the areas of payments, credit, investments, and insurance. This would build on the success of the India Stack, the digital public infrastructure that has supported fintech growth in India. Furthermore, the budget may include measures to strengthen research and development for AI applications through increased support for the National Supercomputing Mission. Sustained investments in local computing power would also be necessary to drive the growth of local AI solutions.

In terms of financing, the Digital Lending Association of India (DLAI) has called for the establishment of a dedicated fintech credit fund to support small and medium-sized fintech companies. This would incentivize the expansion of fintech services beyond tier-III cities and drive economic growth in underserved regions. Overall, the budget is expected to focus on fostering greater access to digital financial solutions across the country, aligning with the government’s goal of increasing participation in the formal economy. The fintech sector is recognized as a key driver of India’s economic growth and the budget is likely to support its continued development.

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