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Below the pre-budget expectations by Mr. Manish Lunia, Co-Founder of Flexiloans.com

Navigating the Budget Terrain: Data-Driven Anticipations for Fintech MSME Lending NBFCs

As we approach the impending budget, the pulse of the Micro, Small, and Medium Enterprises (MSMEs) and Fintech Non-Banking Financial Companies (NBFCs) quickens with expectations of Fintech promoting reforms. Here's a lens on the key anticipations from the upcoming budget:

Targeted Financial Inclusion for MSMEs: With MSMEs contributing over 30% to India's GDP, they form the backbone of our economy, contributing significantly to growth and employment. A budget that prioritizes financial inclusion for MSMEs which contributes over 30% to India's GDP is paramount and the anticipated initiatives include targeted schemes for promoting MSME credit, incentives and policies that encourage Fintech NBFCs to extend their reach to underserved MSMEs, fostering economic resilience and vitality. Facilitating easier access to credit for Fintechs, potentially through collaborative efforts with traditional financial institutions or dedicated government-backed schemes will go a long way in disseminating credit to required sections.

Regulatory Agility for Fintech NBFCs: A conducive regulatory environment that balances risk and innovation is crucial. Expectations include promoting Fintech partnerships by regulators and traditional entities to foster efficiency and to widen customer reach, while ensuring the stability and integrity of the financial system.

Digital Infrastructure Investments: The ongoing digital revolution is transforming the lending landscape. Expectations for the budget involve increased investments in digital infrastructure. This includes support for making customer experience for availing loans as seamless as a UPI transaction, which can enhance the efficiency of lending processes and make them faster and more accessible. Several past announcements of ‘One KYC’ repository, accessibility of GST/ Government data for credit underwriting and monitoring will go a long way in making lending processes efficient.

Incentives for Fintech Innovation: Fintech have to spend a lot to create and manage digital infrastructure to cater customers efficiently. Incentives such as tax breaks or credits for investments in technology-driven solutions, nudging traditional lenders to provide credit to Fintechs at preferential rates will boost the Fintech ecosystem at this crucial time when the ecosystem needs most support.

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