Fintech lenders in the market witnesses a rise in the past two years. Coming in terms with the potential held by these lenders in taking forward inclusion of finance and credit penetration, and eventually developing policies that benefits the sector has to be the principle focus for the government.
Fintech companies that deals with online lending depended heavily on KYC details that Aadhar provides but the recent Aadhar Verdict doesn’t allow any lender to convince customers for sharing Aadhar details for e-verification and authentication. The recent Aadhar verdict has compelled lenders to revisit for individual identification and physical verification which eventually increases the operating costs. Also introducing a new framework for person identification will turn into a costly affair.
What could be the possible solutions?
Lending companies had already spent too much on developing business models relying on Aadhaar, seeking different options is literally an expensive and time-consuming affair. Raising funds to get rid of this problem by enabling easier and authentic consumer verification models which would run around digital data collection and processing might help the sector enormously.
What’s more important is faster license approvals and clearances, perspective of fintech lenders and startups both.
The government, had reserved some amount of funds, in its last budget for technological advancement across the industries. Such budgetary allocations in the future which can improve adoption of AI, Digital Manufacturing, Blockchain, Robotics, and Big-Data technologies by fintech lenders is indeed welcome.
Providing tax benefits by increasing the duration of the tax-holiday period and reducing regulatory influence on the sector is an essential area that should be considered.
Ensuring an environment for digital information that has to be stored and shared skipping the privacy breaches and data leaks which can lead to easier and faster information access and can immensely improve the speed of credit penetration – an important area where Fintech companies have played an appreciable role.
Reducing the Angel Tax that still exists.
Reducing income tax for workers of initial-stage start-ups can also be a great move in lending confidence.
What also has to be addressed in the budget is bringing down of the Minimum Alternate Tax and permitting loss carry-forwards.