Budget 2024: Fintech Urges Government to Enhance KYC, Anti-Fraud Systems
Fintech companies are urging Finance Minister Nirmala Sitharaman to leverage the interim budget for advancing financial inclusion among MSMEs. They are seeking measures to streamline lending processes, introduce incentives for financial inclusion, and provide tax breaks to foster the rapid growth of the sector. Fintech stands out as one of the country's rapidly expanding sectors, with nearly half of the 14,000 startups established between 2016 and 2021 belonging to the fintech domain, as per a report from the Centre for Advanced Financial Research and Learning (CAFRAL). The report further predicts that fintech firms will surpass traditional bank lending routes by 2030.
Fintech industry stakeholders are urging the budget to prioritize schemes and incentives that motivate them to expand their services to underserved MSMEs. They also anticipate government support for collaborations with traditional entities and the encouragement of innovative solutions while ensuring financial stability. Manish Lunia, Co-Founder of Flexiloans, emphasizes fintechs' hope for initiatives like a 'One KYC' repository and simplified access to data for credit assessment to streamline lending processes. Additionally, tax breaks or credits for technology-driven solutions, coupled with preferential credit access from traditional lenders, are seen as crucial for enhancing the fintech ecosystem and fostering further innovation.
In terms of continuous government investment in artificial intelligence (AI), Ankit Ratan, CEO & Co-Founder of Signzy, highlights the importance of such support for developing innovative solutions and implementing robust security measures in the digital landscape. Given the sophisticated tactics employed by fraudsters, Ratan suggests the establishment of a cyber fraud agency to protect customer interests and prevent losses from online scams.
Similarly, Prashant Muddu, CEO & MD of Jocata, emphasizes the budget's need to introduce financial inclusion measures aimed at increasing credit penetration among unserved and underserved individuals in tier-2 and tier-3 markets, as well as over 64 million MSMEs.
Anticipating the budget, Muddu expresses hope that the government will simplify and clarify regulations related to financial services. He also calls for strong collaboration between traditional lenders and fintechs to devise innovative and risk-calibrated solutions for smarter and faster credit assessment using analytics and technology.