Expectations of the Fintech Sector from Union Budget 2024-25: All you need to know

  • Updated on: 25 Jan 2024
  • Published on: 18 Jan 2024
Expectations of the Fintech Sector from Union Budget 2024-25: All you need to know

As the dates for the release of the Economic Survey and Union Budget 2024 are close, leaders across industries and taxpayers have begun speculating what Finance Minister Nirmala Sitharaman will have for them. Since it is going to be an Interim Budget to be announced just before the General Elections in 2024, the Central Government may roll out various support schemes and policies for different sectors.

The Indian fintech industry, too, has a well-defined wish list for the new Union Budget. The Union Government introduced regulatory reforms for the fintech sector last year. Hence, the industry leaders expect further announcements from the Union Budget 2024 that contribute significantly to financial inclusion and broader economic development. 

To know more about the Union Budget 2024 expectations for the fintech sector, read on.

Incentives for Growth in Rural Segments

Here’s a quick recap of the existing scenario:

  • Due to a lack of adequate infrastructure, there are still many areas untouched by the digital payment revolution
  • The Government of India currently utilises the Payments Infrastructure Development Fund (PIDF) to develop digital payment infrastructures in Tier 3 cities and rural areas

Given that the fintech industry has pioneered technological innovations, the government may consider extending support and introducing regulatory reform. Check out some expectations from the Budget:

  • Many leaders in the fintech sector want the Union Government to announce incentives to promote the growth of digital payment infrastructure in underserved and unserved areas
  • The government may provide support to certain fintech companies in the Union Budget that are targeting customers living in these regions
  • This will even drive further financial inclusion and bring the rural segment into the financial mainstream

Increased Support for Digital Payments

A quick glance at the yesteryears can be summed up briefly in the following way:

  • From ₹2,017 crores in 2017-18, the volume of digital payments has recorded a Compound Annual Growth Rate (CAGR) of 45% to 13,462 crores in FY2022-23
  • In the Union Budget 2022 and 2023, the government has allotted a financial outlay of ₹1,500 crores as support for the digital payment ecosystem in India

Here’s what to expect:

  • The Central Government may increase this financial support in the Union Budget 2024
  • PricewaterhouseCoopers (PwC) expects the government to increase it to ₹6,000 crores
  • It also expects an allocation of additional ₹2,000 crores for compensation of losses for RuPay debit card transactions

Due to the immense increase in the volume of UPI transactions, it would be necessary for the government to increase this support to fully support the banks for Merchant Discount Rate (MDR) loss. MDR is a fee that banks charge for processing digital transactions. The increased support will increase the accessibility of digital payments across India.

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Promoting New Talent in Digital Finance Space

As fintech companies show the highest intent for hiring in the Banking, Financial Services and Insurance (BFSI) spectrum, the industry possesses huge potential to support India’s demographic dividend. Akshay Mehrotra, Co-founder and CEO at Fibe, has also emphasised that it is the right time for India to incentivise the growth of the fintech sector in the Union Budget aligning with youth’s aspirations. 

He has said, “Amid a slowdown and grim global economic outlook, the Indian economy appears to be in a favourable and optimistic spot. As per the projections of the International Monetary Fund, World Bank and Reserve Bank of India, India’s growth projections for FY24 range between 6.3 to 6.5%. 

With the Interim Budget expected for 1st February 2024, there is an eagerness for an approach that resonates with the aspirations of the youth in this digital era. The government, focusing on the ‘Make-in-India’ push in the technology sector, is likely to roll out more initiatives to strengthen India’s position in the digital landscape and promote new talent.

Given the increased penetration of new-age technologies in businesses and to augment the economic impact of Generative AI, we expect increased collaboration between the public and private sectors and increased investments for training and upskilling the growing young workforce.”

He further remarks, “With an eye on economic resilience and sustainability, we hope to see a Budget that not only addresses the challenges of today’s digital economy but also builds a stimulus of financial inclusion and paves the way for a robust and progressive future for youngsters. 

We hope that the Budget will not only nurture economic growth but also provide a space for the transformative power of Lending Tech companies, thereby weaving a narrative of financial empowerment that reaches every corner of our diverse nation. This will help in building a responsible lending and borrowing ecosystem,” he added.

Here’s a quick snapshot of what the fintech sector can expect from the upcoming Budget:

  • This is an opportune time for the Central Government to introduce measures that foster long-term growth and sustainable development of the fintech sector
  • In addition to the above-mentioned speculations, many industry leaders expect the government to boost regulations for a safer environment for digital payments

Moreover, there are speculations that the upcoming Budget presented by Nirmala Sitharaman may permit payment banks to extend credit facilities and introduce additional use cases of Central Bank Digital Currency (CBDC).


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