Budget 2022: Fintech Sector Reactions

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Fintech reactions on Budget 2022-23: As Finance Minister Nirmala Sitharaman on Tuesday made an announcement outlining the economic growth for India over the next 25 years. 

Here’s what the fintech sector experts are saying about the Union Budget 2022:

Amar Khullar, Senior Vice President and Head of Operations, NIUM:

The Budget highlights several positives for the fintech and the start-up ecosystem in the country. Extended financial support for the digital payment ecosystem will encourage further adoption of digital payments – which will not only be a catalyst for sector-wide growth, but will also promote greater financial inclusion across India.

It’s also promising to see that India is taking a step closer to adopting cryptocurrencies after years of wait-and-watch. This includes the introduction of a cryptocurrency tax rate, as well as the planned launch of the digital rupee which will usher in more affordable and efficient currency management across the country.

Ram Shriram, Founder, BharatATM:

In the run-up to the Budget this year, one of the most popular demands by the startup ecosystem was the extension of the tax holiday. This is important to show the government’s commitment to building a robust startup economy and ecosystem. 

This is immensely important keeping the number of new start-ups registered in 2021. This is going to be a boost for young startups in the country. The country now has over 61,400 startups recognized with almost 75% of districts having at least one startup each.

Also, the Digital rupee to be issued using blockchain and other technologies and will be issued by RBI starting 2022-23. This will give a big boost to the economy. This budget has eliminated the ambiguity of cryptocurrency legislation by bringing out the policy on digital assets tax of 30%, this is obviously a positive move that has brought little confidence in the crypto investors in India, yet the tax bracket of 30% looks higher as compared to the other countries.

Akshay Mehrotra, Co-Founder & CEO, EarlySalary:

“Budget2022 focused on digital inclusion. We welcome the Indian Government’s decision to use digital channels to increase access to finance. As a Digital Lender, EarlySalary is delighted to participate in this democratic solution for leveraging demographic-dividend. This will help the middle-class people to afford products and services using responsible-credit mechanisms. As a leading FinTech Industry player, we also welcome the idea of digital banks. Furthermore, making Post Offices a part of the core banking system will immensely benefit every Indian. In a nutshell, these decisions would set precedent for the Digital-Only banks and could become a reality very soon.”

Hardika Shah, Founder & CEO, Kinara Capital:

We are happy to see that the Union Budget indicates the government’s emphasis on promoting emerging deep technologies and the digital economy by amplifying the digital transformation currently unfolding in India at rural and urban levels. Promoting fintech solutions, particularly linking existing infra such as post offices and banks for money transfer and setting up 75 distinct digital banking units, will simplify transactions for individuals and rural businesses. Rolling out 5G nationwide by 2025 will democratize tech access for a large number of Indians which will lead to skill-building, job opportunities, and improved mobility for many.”

Dilip Modi, Founder, Spice Money:

“It is extremely heartening to see the digital economy and fintech technology-enabled development being a key focus area for Budget 2022-23. The government’s proposal of setting up 75 Digital Banking units in 75 districts of the country and providing online fund transfer between post office accounts and bank accounts will help in adding further tailwinds to expand necessary banking services to the last mile and enable us to take a step further towards our goal of financial inclusion through rural empowerment. The government’s continuous focus on the digital payments ecosystem has paved the way for digital adoption amongst the unbanked and underbanked population of the country especially post the outbreak of the pandemic. We are hoping to see a much higher traction this year that will address the current challenges faced by the citizens and create a #AtmaNirbharBharat.

Additionally, Finance Minister Nirmala Sitharaman’s announcement on the allotment of funds through NABARD to finance start-ups for agriculture & rural enterprises along with the plans to launch delivery of hi-tech services for farmers including the use of Kisan Drones is a great move towards the development of the agri sector as well as for supporting nanopreneurs.

We are hopeful that the government’s strong support and initiatives including the introduction of digital rupee by RBI will help in accelerating the growth for the fintech sector and will create multiple avenues for the underserved parts of the country.”

Rajeev Agarwal, CEO & Founder, Innoviti Payment Solutions:

The Union Budget 2022 echoes that this year will be an exciting one for the Indian FinTech industry with the government continuing to play a supporting role. 

With India @ 100 in mind, this budget gives the much-needed thrust on financial inclusion by expanding the access of digital banking, digital payments, and FinTech into the remote areas of the country. Initiatives such as bringing all post office banks under the core banking umbrella while setting up 75 digital banking units in 75 districts of the country are a welcome move that will take India forward.

Digital Rupee will further decrease friction in the movement of money, reducing the cost of money and in the long-term contribute to fuelling economic growth

The budget gives a boost to the overall fintech ecosystem, especially to the start-ups in FinTech sector who are working towards making digital payments safer and more frictionless than before.

Madhusudan Ekambaram, Co-Founder & CEO, KreditBee and Co-Founder, FACE (Fintech Association for Consumer Empowerment):

Union Budget 2022-23  had special emphasis on Financial Inclusion, technology adoption and entrepreneurship in the Union Budget 2022 -23, which is highly appreciable. Initiatives like Desh stack e-portal and interlinking of Udyam, e-shram, NCS and Aseem portals will surely contribute to the Digital Infrastructure and entrepreneurial push. Introduction of Central Bank Digital Currency (CBDC), leveraging blockchain technology will influence the digital transactions and hence its implementation process will be something to pay attention to. Government’s recognition of startups as the drivers of economic growth is heartening.

Measures like setting up an expert committee to suggest measures to help attract investment and extension of tax incentives period for startups incorporation by 1 year, will certainly aid in creating a healthy startup ecosystem. Equally encouraging is the Government’s bid to boost digital banking and financial inclusion with initiatives like bringing  100% of 1.5 lakh post offices into the core banking system. In a broader sense, the Finance Ministry has presented a distinctive set of measures in Union Budget 2022-23, with a streamlined focus on rapid, holistic and inclusive economic growth.

Jitendra Gupta, Founder & CEO, Jupiter:

“Our goal has always been to meet the objective of financial inclusion. This year’s Budget announcement to expand the scope of digital banking will provide further boost to technology, innovation and digital banking solutions, thereby addressing the evolving consumer expectations, and the growing need for hyper-personalised products and services. This will pave the way for an enhanced and inclusive digital economy. Additionally, the tax incentive offered to start-ups in this Budget is a welcome move, which will empower entrepreneurs and aid businesses.”

Akash Sinha, CEO & Co-Founder, Cashfree Payments:

Budget 2022 is a reflection of consumers’ trust in digital-first approach to banking & finance. Economic Survey 2022 highlighted that UPI is currently the single most extensive retail payment system by volume, reiterating its wide acceptance. This has contributed immensely towards driving digital transformation in the country. Additionally, the idea of setting up digital banking units in multiple districts will help in the homogenisation of the financial services in rural and semi-urban geographies. 

The launch of digital currency by RBI is both encouraging and critical in empowering the digital native youth to take a transformational leap from the conventional currency tools. We have witnessed an increasing use of blockchain technology to simplify and secure the consumer’s journey, and this push was required to encourage innovation in this domain. Fintechs and startups must help stakeholders establish connections with remote locations and provide value-added services to the underserved and unbanked segments. 

Moreover, the 5G spectrum technology and the scheme for the penetration of fibre optics across villages will boost the growth of rural and gig economies. We also compliment the Hon’ble Finance Minister for the support extended to the startup ecosystem via reforms in taxation, incentives, investments and other benefits that will promote Make in India and Digital India initiatives. We feel that the announcements made during the budget session display the growing importance of startups and their ability to exhibit agility and purpose alike.

Dr. Navneet Gupta, Founder & CEO at YPay:

“India’s fintech system was a silver lining in the difficult times of lockdown and the pandemic. The nation has been bullish with digital payments, and the current budget has further fueled the same by announcing 75 digital banking units in 75 districts. Inclusion of 1.5 lakh post offices under banking system with digital infrastructure enablement will promote financial inclusion, and accelerate shifting micro economy in the mainstream banking system. Gradually, all the efforts will strengthen credit access, and payments in the MSME system will certainly reflect in the nation’s economic growth at large,”

Anurag Sinha, Cofounder & CEO, OneCard and OneScore:

Considering we have not yet emerged out of the shadows of the pandemic, I believe the Finance Minister has done an excellent job in striking a fine balance in being fiscally prudent and growth supportive. The budget has laid out a host of top-notch measures offering a huge push for infrastructure besides incentivising manufacturing and addressing key growth driving cohorts such as MSMEs, youth and even the startup community.

The budget has laid considerable focus on public investment and capital expenditure however on the other side it is quite conservative in its tax growth estimates. The budget however contains several significant reform measures and fiscal initiatives that will boost social and economic development.

Promoting digitization across sectors and levels is indeed a welcoming move which would not only speed up the processes but also bring much-needed transparency and uniformity to the system. Introducing digital currency is a dynamic decision taken by the government and would really help the economy in coming at par with developed economies. It would also streamline the current financial infrastructure, making it cheaper and faster to conduct monetary transactions. Further to promoting digital currency, the move of introducing 75 digital banking units in 75 districts will significantly strengthen the financial infrastructure across the country. All in all, with an outlay from India at 75 to India at 100, I believe this Budget is futuristic and focuses well on economic revival while ushering the next era of growth for India.”

Bhavin Patel, Co-founder & CEO, LenDenClub:

“Union Budget 2022-23 started on a positive note with a vision for India@100. The measures announced have huge potential to pave a robust growth path for the next 25 years which can make India truly progressive, technologically advanced, and financially strong. Laying a substantial focus on MSMEs who account for more than 30% of India’s GDP is extremely encouraging which will go a long way in driving economic growth and employment. The 6,000-crore programme to rate MSMEs to be rolled out over the next five years and the extension of the Emergency Credit Line Guarantee Scheme (ECLGS) till March 2023 are huge strides towards enhancing capital access to MSMEs’ and making them more resilient and competitive.

Although few tax slabs were anticipated, especially if returns from Peer-to-Peer (P2P) lending investments may have been exempted under Section 80C of the Income Tax Act or a different provision could be carved out to minimize tax rates, it would have encouraged investors to invest more.

Extending the time of incorporation of the eligible start-up for tax incentives by one more year is hugely encouraging for aspiring entrepreneurs and the startup ecosystem. Overall it is a growth-oriented budget offering a slew of measures to drive consumption, investment, and economic revival in the aftermath of the pandemic.

Mandar Agashe, Vice-Chairman & MD, Sarvatra Technologies Ltd:

“It is a digital budget. It has been an overall balanced budget with many positive announcements relating to digitization. We appreciate the government for taking a step forward with its ‘Digital India’ initiative by proposing 75 Digital Banking units in 75 districts by scheduled commercial banks. The measure will ensure the acceleration of digital payments across the country. Further, introducing an online e-bill system will reduce payment delays and be wholly paperless and end-to-end encrypted. Given the rapid rise of digital banking, digital payments, and FinTech innovation, it was critical to develop digital infrastructure to support digital banking, which has enormous potential. Another excellent initiative of bringing in a blockchain-based digital rupee will lead to instantaneous financial transactions instead of the current digital payment system. We foresee that the digital rupee will be a game-changer and might outperform other digital currencies which are currently available.”

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Krishna Mali
Krishna Mali
Founder & Group Editor of TechGraph.

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