This year budget draws bold policy interventions to strengthen digital infrastructure which would eventually help digitizing banking and thereby the overall economy.
File image of Finance Minister Nirmala Sitharaman posing for pictures ahead of presenting the annual budget in Parliament. AFP
COVID has been a “Chief Transformational Officer” in the Banking sector and has only pushed banks to focus & prioritise on Digital Banking.
It is therefore critical that the budget draws bold policy interventions to strengthen digital infrastructure which would eventually help digitizing banking and thereby the overall economy.
POS Terminal & Biometric Devices
The PoS terminal & Biometric Devices are financially, infrastructurally, and operationally far more affordable and far less demanding than an ATM. The budget should consider making devices such as the PoS terminal / Biometric Devices as the most viable acquiring infrastructure for banks and fintech companies by offering incentives such as a GST subsidy.
Additionally, GST subsidy for merchants providing digital payments especially in Tier II / III / IV cities who are empowering digital onboarding and digital payments will finally catalyse the financial inclusion movement envisioned by the government.
Incentivise Development of more Technology Solutions like UPI
UPI has been a breakthrough, technology and it is important we replicate its success through newer and more innovative technologies. Since India is a diverse country and not a same size fit all country, so it is imperative that we develop more technology solutions like UPI and the budget should encourage FinTech’s and technology start-ups to invest more in R&D to introduce newer products and diversify into newer geographies.
Data Security Infrastructure
In the post-COVID world, digital infrastructure will be a game-changer for companies and countries and therefore it is important we take timely measures to ride this wave.”
Considering the amount of data being created and stored across industries which is growing at unprecedented rates, the Budget must encourage organisations who work towards enhancing the security infrastructure to protect and manage data seamlessly.
Incentives for NBFC’s & FinTech’s working for Unbanked Population
NBFC’s & FinTech’s who are into small & digital lending and who are spending on technology and various tools to reach out to unbanked or underbanked category must be recognised by provided tax incentives & easy accessibility to funds.
A reduced GST & TDS to the BC network
A reduced GST and TDS especially for banks’ business correspondents (BC) in rural areas could help reduce cost of offering seamless banking services and push for greater financial inclusion and a digital economy.
Creation of a separate Fintech Division at RBI is a welcome step and we look forward to the RBI in not only promoting innovation in this sector but also identify the challenges and opportunities associated with it and address them in a timely manner.
The author is the chief executive officer and co-founder of PaySprint, a fintech venture focused on next gen neo-banking solutions, offering a unified open API platform. Views expressed are personal
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