For the first time ever, a Finance Minister used the word “Fintech” during the Union Budget.
Today, for the first time ever, a Finance Minister used the word “fintech” during a Union Budget speech. This word has come a long way. Fintech has gone from being an ambiguous 20th century portmanteau to an idea whose time has come, reshaping our money decisions on a daily basis. Fintech now influences how we send and receive money, buy financial products such as loans and insurance, or save for the future.
BankBazaar has been at the forefront of this push on fintech. We have been working with government agencies such as NITI Aayog, trying to make them aware of our constraints and making pleas to lift the barriers that would unleash the full power of fintech in India. Also, we were a part of the pre-budget consultation group. We are pleased to see this government making the budget allocation process inclusive and including recommendations and feedback from stakeholders.
Let’s take a look at announcements that impact digitisation and fintech in India:
Growth of Fintech
Jaitley said, “The use of fintech in the financing space will help the growth of MSMEs. A group in the Ministry of Finance is examining the policy and institutional development measures needed for creating the right environment for Fintech companies to grow in India.” This move is welcome. Regulatory reform must be up to speed with technological innovation.
Today, we have a digital infrastructure, which, if unleashed, can help hundreds of millions of Indians save, invest, insure, and borrow in a hassle-free, timely manner, thus bringing a giant mass of humanity rise above socio-economic challenges.
Impetus on Digital India
Many announcements were focused to push Digital India. With 2X investment and improving digital presence in rural India by setting up 5 lakh WiFi spots in rural areas. NITI Aayog and Ministry of Science will drive Artificial Intelligence, machine learning, robotics, big data analysis, internet of things, and new digital technologies. The allocation towards Digital India has been doubled to Rs. 3073 crore.
Online Loans For MSMEs
In another boost to the fintech ecosystem, Jaitley made the welcome announcement of online loan sanctioning for MSMEs. This would lead to instant decision making for banks. He said, “Government will soon announce measures for effectively addressing non-performing assets and stressed accounts of MSMEs. This will enable larger financing of MSMEs and also considerably ease cash flow challenges faced by them.”
MUDRA Loans Get A Fillip
The MUDRA Yojna offers microcredit up to Rs. 10 lakh. A staggering 76% of the loan accounts belong to women, and more than 50% to SCs, STs, and OBCs. From its earlier target of Rs. 1.8 trillion, the actual amount of loan sanctioned went to Rs. 4.6 trillion to 10.38 crore accounts.
Buoyed by the targets being met, Jaitley announced new MUDRA lending target of Rs. 3 trillion. This would undoubtedly encourage more women to take microcredit and boost their businesses.
Yes To Blockchain, No To Crypto
Jaitley spoke about implementing Blockchain in helping improve access to digital economy. However, he said, the government doesn’t consider cryptocurrencies legal tender and will explore all options to eliminate their use. This should caution any Indians engaged in the trade of cryptocurrencies.