As our Finance Minister, Nirmala Sitharaman said the preparation of Budget 2021 was undertaken in difficult circumstances. The COVID-19 crisis left the country in a tough spot to revive from. With India already in a slowdown, the economy was pushed into an unprecedented contraction. Surviving the pandemic and moving forward requires a well thought out Budget, one that helps enterprises, companies, producers and consumers recover from the shock. The FinTech sector plays a key role in the revival of the economy especially with its convenience and ease of borrowing, lending and making payments. The Budget has thus stressed upon boosting the digital finance sector in the Post-Pandemic economy. It has allotted Rs. 20,000 crores as capital support to National Banks for Financing Infrastructure and Development.
The FinTech Sector Budgetary Focus Points
Financial Capital Proposals
The committee has proposed to consolidate the provisions of SEBI Act, 1992, Depositories Act, 1996, Securities Contracts (Regulation) Act, 1956 and Government Securities Act, 2007 into a rationalized single Securities Markets Code. The Government would support the development of a world class Fin-Tech hub at the GIFT-IFSC.
Reducing Minimum Loan Size for NBFCs
It is proposed to reduce the minimum loan size eligible for debt recovery under the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act, 2002 for NBFCs with minimum asset size of `100 crores, from Rs.50 lakhs to Rs.20 lakhs to improve credit discipline while protecting the interest of small borrowers.
Development of Technology
During the coming fiscal 2021-22, the Government will launch data analytics, artificial intelligence, machine learning driven MCA21 Version 3.0 which will have additional modules for e-scrutiny, e-Adjudication, e-Consultation and Compliance Management.
Promotion of FinTech Start-ups
In order to incentivize establishment of more start-ups in the country, the committee proposed the extension of the eligibility period to claim tax holiday for the start-ups an extra year to 31st March, 2022. To encourage more investment in start-ups, they proposed to extend the eligibility period of claiming capital gains exemption for investment made in the start-ups to 31st March, 2022.
Promotion of Electronics and Digital Payments
To promote usage of Digital payments Major Scheme, the committee has allotted an estimate of Rs.1500 crores in 2021 compared to Rs.512 crores allotted in 2020. For the promotion of Electronics and IT HW Manufacturing the budget estimate is Rs.2632 crore in 2021 as compared to Rs.655 crore spent in 2020. Due to a manifold increase in digital payments in the recent past, to boost digital transactions, it has been decided to allot Rs.1500 crore to provide financial incentive to promote FinTech’s in the digital mode of payment.