The fintech industry has urged Finance Minister Nirmala Sitharaman to further liberalize the tax regime for financial sector startups in the upcoming budget, arguing that it has immense potential to promote financial inclusion and create significant employment opportunities. . The Finance Minister is scheduled to present the Union Budget 2022-23 in Parliament on February 1. On the expectations of the fintech industry from the budget, Gaurav Jalan, CEO and Founder mPokket said that all startups including fintech firms extensively use stock options to attract and retain talent.
However, employees of such fintech companies who exercise their ESOP (Employee Stock Ownership Scheme) option will not only have to arrange funds to buy it, but will also have to pay tax of around 35 per cent as the allotted shares will be held in their hands. Considered part of the package. They said.
Jalan suggested, “tax collection at the time of sale of such shares, rather than collection on the employee’s projected earnings, will solve the cash flow issues of the employees and will greatly help fintechs to attract and retain talent, thereby helping the industry.” It will help in the overall development of ,
Shruti Agarwal, co-founder of Stashfin, said that the government’s digital push has opened doors for financial inclusion and a fintech revolution. “I want the budget to put a dedicated focus on driving the fintech ecosystem in the country. The fintech industry has the potential to help take the Indian economy to the place it rightfully deserves.”
Agarwal said that just as priority sector lending has helped the priority sectors of the economy, which may require loans and financial support from NBFCs, it will be beneficial for fintech startups if more segments are involved which are limited. Promote financial inclusion for citizens with a credit footprint, Agarwal said. He further said that at present the lending by banks to NBFCs is up to an aggregate limit of five per cent of the total priority loan of the individual bank.
“If it is increased to 7 per cent, it will give a further boost to the economy,” Agarwal said. Rakesh Kaul, CEO, Clix Capital said that as an important funding avenue for those ineligible for finance from mainstream lenders, NBFCs can play a vital role in facilitating. rapid economic recovery.
But low-rated NBFCs face huge liquidity challenges as funding by banks is mainly directed towards top-rated or government-backed NBFCs. “Accordingly, the Finance Minister may announce bold steps encouraging banks to resume funding to NBFCs, especially small and medium-sized players,” Kaul said. He further said that the authorities should also facilitate co-loan origination between banks and fintech firms, which ensures both share the risk.
Kaul said that this would ensure that the banks also get the benefit of priority sector for such loans. Nitya Sharma, Co-Founder and CEO, Simple was of the view that the fintech industry, especially the digital payments sector, has proven its potential as a steady growth avenue even during the pandemic and the Center’s full support in taking it forward has done. digital economy.
“To ensure the benefits of fintech and digital payments to customers in rural India, the government may focus on expansion of digital infrastructure, i.e., payment touchpoints and 5G internet connectivity in remote areas. It will facilitate instant transactions and enhance the real-time payment system.” Sharma further added that digital payments that deploy cutting edge technology like machine learning, data analytics and more play a vital role in the creation of cashless, digital . -First economy.
“We welcome the government’s support for technology skill-building initiatives in startups, which can go a long way in creating a viable fintech ecosystem,” he added. There are over 60,000 startups in India with 42 unicorns. The government has decided to celebrate January 16 as National Startup Day so that this culture of startups reaches the far flung parts of the country.
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