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Budget a step towards accelerating growth of fintech sector

Digital banks to help in penetration of financial services in rural market

Fintech-companies- Representative image

Fintech players are optimistic that the measures announced in the Union budget will help them grow further. Some measures such as adding 75 digital banking units in 75 districts by scheduled commercial banks and opening full banking activities in 1.5 million Indian Postal Offices and permitting interoperability across banks for digital transfers are expected to provide a big boost to fintech companies trying to grow into rural areas and other corners of the country. Such measures are also expected to help in further financial inclusion in the country.

“Fintech businesses can now start offering premium services that are now exclusively available to the urban populace due to the simplicity with which these are now open to all regions of the country. The focus on using IT in agriculture, as well as the startup concentration on the topic, will help to enhance the agricultural sector and provide a bridge between fintech and agritech. All these will impact financial inclusion in the loans, new age banking services like neo banking and wealth management. These services will be reachable to around 60 crores Indians in rural areas,” pointed out Archana Elapavuluri, Founder of Pickright Technologies.

Fintech players with whom THE WEEK spoke feel that setting up digital banks will help in the penetration of digital financial services in the rural market which has 40 crore plus Jan Dhan customers. “Such a move will not just help to bring the unbanked population under the financial ecosystem but also enable them to receive timely financial aid to fulfill their education, business and health needs. Especially post pandemic when out of pocket expenses to meet medical emergencies have shot up drastically, forcing people to resort to unorganised debt markets consisting of loan sharks. So while more details are awaited, I hope this also paves way for PPP (Private Public Partnerships) to emerge and provide specialized, low cost, targeted financial services, because rural banking needs are starkly different from urban needs,” pointed out Saurabh Soni, Co-founder, Digisparsh.

As per the Fintech Association for Consumer Empowerment (FACE) over the last couple of years, the fintech industry has proven itself to be an economic multiplier, generating wealth, value and inclusion across customer segments. “To help fintechs generate wealth, we welcome the government’s decision to establish thematic funds to promote and encourage sunrise sectors in India. Fintech has been one of the fastest growing segments among the Indian start-up ecosystem. With the introduction of thematic funds, where the share of the government would be limited to 20 percent, the government has established a constant flow of capital for the sector, enabling it to constantly innovate and grow, while at the same time generating wealth for investors,” said FACE in a statement. 

Besides this, FACE is of the opinion that by allowing world class universities and institutions to offer courses in financial management and fintech at GIFT City, the government is setting the stage for fresh minds to be trained in these sectors who will then go on to create groundbreaking innovations. 

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