In her Budget 2022 speech, Finance Minister Nirmala Sitharaman said promoting the digital economy and fintech has been a key focus for the government. With an aim to take digital banking to every citizen, the FM mentioned that 75 digital banking units will be set up across 75 districts.
“In recent years, digital banking, digital payments and fintech innovations have grown at a rapid pace in the country. Government is continuously encouraging these sectors to ensure that the benefits of digital banking reach every nook and corner of the country in a consumer-friendly manner. Taking forward this agenda, and to mark 75 years of our independence, it is proposed to set up 75 Digital Banking Units (DBUs) in 75 districts of the country by Scheduled Commercial Banks,” said the minister.
Industry experts believe that this Budget focused on fintech innovation and that government’s boost to the digital banking, payment, and fintech innovation sector will ensure that people of the country can access financial services in a consumer-friendly manner.
Dr. Navneet Gupta, Founder & CEO at YPay states, “India’s fintech system was a silver lining in the difficult times of lockdown and the pandemic. The nation has been bullish with digital payments, and the current budget has further fueled the same by announcing 75 digital banking units in 75 districts. Gradually, all the efforts will strengthen credit access, and payments in the MSME system will certainly reflect in the nation’s economic growth at large.”
According to Gurjodhpal Singh, CEO, Tide (IN), a UK based fintech offering business banking solutions, “The financial support for the digital payments ecosystem is a welcome move and further reaffirms the Government of India’s digital banking push. This push on digitization will make way for more inclusion in the ecosystem.”
He adds, “The focus on ‘Ease of doing business’ is a great step, as it will further promote entrepreneurship in the economy. Fintechs will continue to play the role that we have been playing for the past couple of years now, and these policies will further strengthen our role in the ecosystem. Moreover, the decision to interlink MSME portals and added corpus is the much-needed support at this hour.”
Poshak Agrawal, Co-Founder & CEO, Florence Capital, a women-centric ethical Lending platform the budget has focused on digital payments and how it can be a key tool towards enabling financial inclusion.
“The Budget has acknowledged that taking forward the digital banking and fintech innovations is the way to go – it is proposed to set up 75 digital banking units in 75 districts of the country by scheduled commercial banks. We hope to be able to support this mission and vision of financial inclusion by providing secured, transparent and accessible credit to women. Financial inclusion will play a key role in ensuring that the goal of 9.2% economic growth is achieved,” says Poshak.
Rishi Chhabra, Country head & GM India and Sri Lanka, Fiserv, says, “The Union Budget 2022-23 supports India’s vision to enhance financial inclusion. Motivating organisations to expand and innovate through technology and integration of post offices to banking services, will take digital banking and payment solutions to the last mile. While this will undoubtedly boost the banking and payment ecosystem by enabling easy access to financial products in the country, it will also create room for technological advancements and innovations to offer simplified, user-friendly and secure financial services and payment solutions.”
To further bolster its digital payments initiatives, the FM says, 100% of 1.5 lakh post offices will come under core banking and enable online transfer of funds between post offices and bank accounts. This will enable interoperability and access to accounts through net banking, mobile banking, and ATMs as well as financial inclusion. As Gupta says, “Inclusion of 1.5 lakh post offices under banking system with digital infrastructure enablement will promote financial inclusion, and accelerate shifting micro economy in the mainstream banking system.”
Financial inclusion has been an important target for the government, especially since the 2016 Demonetization when reliance on digital payment enablers drastically increased. Since then, the government has extended support to innovative financial players in the form of incubation centers, grants, and hackathons to bolster this initiative.