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2024’s Interim Budget: Will BFSI, fintech expectations be met by FM?

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Key Points:

  • The upcoming Interim Budget for 2024 is expected to focus on fiscal consolidation, business and taxation law simplification, infrastructure development, and financial inclusion.
  • The banking and fintech sectors are expecting reforms and announcements related to digitalisation, cybersecurity, stressed assets and NPAs, digital infrastructure and payments, digital adoption and innovation, reforms for fintechs, investment for startups, liquidity ease for NBFCs, and permitting NBFCs to offer credit cards.

The banking and fintech sectors have high expectations from the upcoming Interim Budget for 2024, despite it being a mere vote on account. Economists and experts believe that the government will maintain its focus on fiscal consolidation, business and taxation law simplification, infrastructure development, support for MSMEs, and financial inclusion. The banking sector is particularly hoping for some reforms and policy changes from the finance minister.

The banking sector is anticipating measures in the Union Budget to promote digitalisation, enhance cybersecurity, address non-performing assets (NPAs), and introduce reforms for financial inclusion. Stakeholders are also looking for policies that encourage investments, ease regulatory frameworks, and foster innovation within the sector. Additionally, more measures to boost economic growth, reforms in taxation, infrastructure development, incentives for key sectors like manufacturing and technology, and efforts to address fiscal challenges while ensuring social welfare are expected.

One of the key areas of focus for the banking sector is stressed assets and NPAs. There is a need for suitable policy decisions to boost the activities of the National Asset Reconstruction Company Limited (NARCL) and India Debt Resolution Company Limited (IDRCL), which were created to tackle these issues. The creation of NARCL and IDRCL was announced in the Union Budget 2021 to deal with the NPA menace. The banking sector is also expecting a focus on digital infrastructure and digital payments to strengthen financial inclusion and boost the growth of the auto finance sector.

The fintech sector is calling for well-defined action plans to strengthen digital infrastructure, promote digital payments, and enhance the accessibility of financial services and government benefits. The sector expects a GST subsidy, policies that incentivize the creation of a fertile environment for fintech startups to innovate, regulatory frameworks to curb digital fraud and build a safer digital payment environment, and a standardized KYC framework across all financial services.

Fintech players are also seeking measures to increase capital availability for fintechs operating in underserved domains, regulations and tax incentives for fintech startups, and policies that unlock the potential of fintechs in enabling financial inclusion and powering their growth. The investment community is eagerly awaiting a shift in sentiment toward startup investments and a rationalization of capital gains tax to bolster capital inflows into the startup landscape.

The banking and fintech sectors are also hoping for measures to support liquidity ease for non-banking financial companies (NBFCs), permitting NBFCs to offer credit cards, and improvement in access to liquidity, skill development, and ease of doing business for MSMEs.

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