What the fintech industry hopes for the 2024 budget

A new BankBazaar.com article outlines the budget wish-list of the fintech sector, which includes getting all banks on board with the account aggregator structure, creating parity between digital and non-digital lenders, and treating unlisted equity at par with listed equity for long-term capital gains taxation.Expectations are high regarding certain favors being given to taxpayers and specific industries, even though India's finance minister Nirmala Sitharaman has stated that the upcoming Budget, which is scheduled to be presented on February 1, is only a vote-on-account (approving the continuation of existing programmes) and not a full-fledged Budget.BankBazaar.com has published a list of requests the fintech industry has made of the government in a report. While some of these requests may not be covered by the budget, they can be seen as a comprehensive list of what the fintech industry hopes to see in 2024.Account aggregator (AA) framework with fast tracking – The government introduced the AA framework in September 2021, which makes it possible for financial institutions like banks and insurance companies to securely share a person's data with that person when that person gives consent. The idea is that a person can electronically share their financial information with another financial institution rather than having to send paperwork to each one individually. The person must register with an AA, an organization under RBI regulation.The BankBazaar.com paper discusses getting as many bank accounts as possible integrated into this framework and bringing all banks—public and private—on board the AA system. According to the most recent data, a few banks are still not included in the AA framework, including City Union Bank, Dhanlaxmi Bank, RBL Bank, South Indian Bank, and others.It also discusses incorporating the Goods and Services Tax Identification Number, or GSTIN—a designation that in India identifies businesses that are registered for GST—into the AA framework. Once that occurs, it will open the door for small enterprises and retail consumers to obtain loans from many lenders in a purely digital manner.More documents have been added to DigiLocker. Additional documents including the EPFO passbook, ePAN, and form 26 AS (statement showing tax credit) should be added to DigiLocker, according to a BankBazaar.com article. Customers will benefit from easy access to their papers and the ability to share them with financial institutions for prompt credit disbursement.The Ministry of Electronics & IT introduced DigiLocker, a safe cloud-based platform for document exchange, archiving, and authentication. Using a smartphone or Aadhaar number, one can register for DigiLocker and then submit documents.Creating an even playing field for online and offline lenders The RBI released its rules for digital lending in September 2022, in response to the unscrupulous activities of illicit digital lending apps.

The guidelines place the burden of proof on banks and NBFCs to make sure that, among other things, grievance redressal officers are engaged, loan-related costs are disclosed upfront, and digital lending apps and platforms do not misuse customer data. They also state that loan servicing occurs directly with the lender's (regulated entity) account and not the digital lending app or platform.According to the BankBazaar.com research, online and offline lending should be treated equally. This consumer-centric legislation that was put in place for the online lending sector must also be applied to the offline lending sector. According to the research, "the growth of the FinTech industry depends on the level playing field principle."Laws pertaining to the DPDP Act's implementation: The Digital Personal Data Protection Act, 2023 (DPDP Act) mandates that anyone in possession of data take appropriate precautions, obtain consent before using the data, and even face severe fines in the event that a data breach occurs. According to the DPDP Act, a "consent manager" is any third-party organization that is registered with the Data Protection Board and that gives people the ability to grant, monitor, and revoke consent for the use of their data by "data fiduciaries," such the government or a financial institution.