Acknowledging the huge credit deficit of about USD 2 trillion for micro, small, and medium enterprises (MSMEs), Finance minister Arun Jaitley emphasised the importance of fintech startups for easier access to working capital requirements.
The minister in his Budget 2018address said that the government will set up a group under Finance Ministry “to help devise institutional development measures” to help FinTech companies grow in India.
Alok Mittal, CEO of Indifi and President of Digital Lenders Association of India said the association welcomes recognition of online lending as a key driver to MSME credit, and the group will collectively work with the government to enable this. According to a report by McKinsey, nearly 75% of the emerging FinTech lenders are helping MSMEs with lending, payment systems, retail banking, wealth management, and more.
India Union Budget 2018-19 Live: News, updates and highlights from FM Arun Jaitley’s Budget 2018 speech, announcements
“The budget overall is positive. There is visible support for Fintech industry as the FM specifically mentioned that Fintech is playing an important role in countries growth and hence announced setting up a working group for its growth,” Adhil Shetty, CEO and Co-founder of BankBazaar said.
The government backing spells possible favourable weathers for online digital lending entities such as Capital Float, Lendingkart, Rubique, Cointribe and so on, who lend small-size loans to the MSME sector without elaborate documentation or credit history.
“We are happy that Finance Minister has acknowledged voice from Fintech Industry seeking soft touch approach to regulation and making strong case for fintech participation in supporting SME/ MSME growth. Fintech as a segment has been signalled out in this budget with a very clear objective of credit push to the last mile. We see it as strong government backing for the way fintech industry is shaping in India,” Satyam Kumar, CEO and CO-Founder of Loantap said.
However, the industry had asked for a push on the usage of e-Sign to authenticate documents digitally, and for complete paperless on-boarding of accounts for all financial products including the adoption of e-NACH and DigiLocker technologies can enhance digital financial inclusion of the country. The government hasn’t touched upon this demand of the FinTech sector.
The government has also allotted Rs 3 lakh crore for lending in FY 19 under MUDRA Yojana for MSMEs to increase credit availability in the sector.