In the Union Budget 2024, the Indian government has unfurled a stable roadmap that places special emphasis on fostering innovation within the financial sector. Budget 2024 presents a mixed bag for the Fintech lending industry and the NBFC sector. While initiatives like the DBT scheme, tech-savvy growth fund, and extended start-up benefits hold immense promise, concerns regarding fiscal deficit and tighter credit conditions cannot be ignored.
I attempt to place the top takeaways for the financial sector here:
Economic thrust in right direction
A notable highlight of the budget is the resolute preference for digital transactions for government schemes and the benefits of over Rs 2.7 lakh crore for the government. This opens doors for technology players offering innovative payment solutions and potentially disrupting traditional banking channels. Focus on budgets for skill development, financial inclusion and youth empowerment will ensure more productive workforce, that remains our biggest asset. The success of PM Mudra Yojana highlights the government's commitment to financial inclusion.
Also read | Budget impact on debt funds: Fixed income managers may look to add duration to their funds
Focus on Infrastructure
Increased spending on infrastructure development could create investment opportunities in related sectors, impacting NBFCs and fintech lenders catering to these areas.
Tech-Savvy Growth Fund shows thrust on technology empowerment and adaption
The Rs 1 lakh crore corpus with 50-year interest-free loans for tech-driven growth presents a unique opportunity for lenders. This can fuel innovation and accelerate their reach, potentially increasing competition in the lending space. This significant investment in research and development (R&D) in sunrise sectors can potentially create new opportunities for fintech lenders. Roop Top solar segment thrust can boost lending in the Green financing space.
Start up Benefits Extended boosts confidence
Extending tax benefits for startups until March 2025 and attracting investments from sovereign wealth funds and pension funds bodes well for the Fintech ecosystem. This can provide much-needed capital and mentorship, fostering the growth of new-age lending platforms.
Also read | Applying the 3Cs of Budget 2024 to your financial plan
NBFC/ Fintech Sector
Uncertainty Persists: The budget lacked specific measures addressing regulatory concerns surrounding NBFCs. This ambiguity might continue to impact investor sentiment and the overall growth of the NBFC sector. Similar support sought for deepening the MSME segment lending weren’t outlined and could halt the momentum.
Several other boost in terms on both encouragement and steps for start-ups and Fintech ecosystem were missing and lagged the expectations in this budget.
Stability for masses
Keeping the income tax slabs unchanged will ensure purchasing power continuity in the election bound year for both corporates and individuals.
Overall, Budget 2024 presents a mixed bag for the financial sector. While initiatives like the Rs 1 lakh crore corpus and continued support for startups hold promise, the lack of specific measures for NBFCs and regulatory uncertainty create some concerns. For consumers and investors, the impact will depend on various factors, including the successful implementation of announced schemes and overall economic growth. For the macro economic segment, like they say that ‘Budget should be a non-event’, it seemed it was one!
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