Financial Technology (FinTech) industry plays a crucial role in improving access to financial services products across the country. Some of the factors responsible for the surge in the relatively new filed of FinTech include a rapid increase in the number of smartphone users, increased penetration of internet connectivity across the country, and government initiatives like ‘Digital India’.
According to a KPMG report, highlighting the rapid rate of adoption of digital transactions and payments, digital payments in India are growing at a CAGR of 12.7%. Moreover, a report published by Statista says that the total transaction value in the digital payments segment is expected to grow at 20.1% CAGR between 2019 and 2023, amounting to $134,588 million.
Apart from optimizing process internally, the application of advanced tools and technologies also provides end-user with a superior experience, ensuring greater convenience, engagement, and enhanced security. First, unsecured loans of up to ₹50,000 issued to first-time borrowers or those with lean credit history may be qualified for Priority Sector Lending. This will facilitate the introduction of better products and higher penetration of credit in a fast-growing, yet credit under-penetrated segment.
To avoid the relatively high cost of processing and verification, the amount for smaller ticket personal loans are disbursed directly into bank accounts of customers. As the loans are disbursed to KYC-compliant bank accounts, the FinTech industry wants KYC-relief for such small loans.
Industry experts want a differentiated view on KYC fulfilment to be adopted for smaller ticket personal loans and elimination of double KYC as banks already carry out the necessary KYC process for account holders. They also want changes in Dividend Distribution Tax (DDT) and GST rules for FinTech companies, allowing the FinTech industry to flourish while still being at its promising stage. The industry is looking forward to a differentiated treatment in the upcoming Budget 2020, aimed at strengthening the business models and value proposition for customers.