Digital Lenders Association of India (DLAI) – PWC report on the ‘Impact of the Budget 2017 on Digital Financial Services’

Digital Lenders Association of India (DLAI), a private association formed by leading fintech companies in the Digital Lending space such as KredX, Capital Float, Lendingkart, Finomena, Rubique, Zest Money, Indialends and Neogrowth released a report titled ‘Union Budget 2017: Impact of Digital Financial Services’. The report analyses the measures around Digital Payments, Lending and the reduction in taxes for MSMEs.

Commenting on the report, Anurag Jain, Co-Founder, KredX said “It is encouraging to see measures around incentivizing and increasing the adoption of digital payments in the Union Budget. This will push SMEs to adopt digital finance channels and help the country move towards a “less-cash” society. Refinancing of unsecured loans for credit institutions is a welcome step. We thank PWC for their inputs and hope people can gain valuable insights from this report.”

“This is a progressive budget and rightly focuses on some of the critical areas such as rural population, financial sector, skilling of youth and promotion of digital economy. We resonate the government’s vision of enabling financial inclusion through proliferation of digital literacy in rural India. In this regard, the initiatives announced in terms of bringing in reforms in the digital payment system and introduction of Aadhar Pay app is a welcome move towards empowering the fintech segment, at large. SMEs in India are credit starved. In this regard, the increase in limit of Pradhan Mantri Mudra Yojana (PMMY) for banks and NBFCs to Rs. 1,80,000 crore is a positive step towards bridging the financing gap existing in the SME segment. Additionally, the fact that presumptive taxation scheme turnover limit has been extended to Rs. 2 crore, will bring  relief to the MSME category. Also, the reduction of income tax for smaller companies to 25% will act as a stimulus for these units to expand their business. Lastly, we are pleased to see FDI being allowed beyond 18 specified NBFCs activities in the automatic route as this is expected to provide the much needed boost to the financial service sector. This move is expected to particularly benefit domestic fund management and advisory businesses which may now raise foreign capital under a relaxed regime, without adhering to the previously prescribed minimum capitalization norms”, added Harshvardhan Lunia, Co-Founder & CEO at Lendingkart.
“This budget will create significant momentum for SMEs to go digital. Between incentives for cashless transactions, tax cuts for SMEs, and investments in digital infrastructure like BHIM, we expect to see an accelerated pace of businesses entering the formal system. This will, in turn, create a massive base of data-rich customers for digital lending platforms in the long run”, added Sashank Rishyasringa, Co-Founder, Capital Float.
Formed in October 2016, DLAI aims to represent, advise and consolidate the efforts of the Digital Lending industry by working closely with the government, regulators, policymakers and other appropriate forums, thereby adopting global best practices and code of conduct. DLAI’s vision is to support the development of Digital Lending industry and markets in India through independent objective analysis, research and development based on global principles and standards of appropriate policies covering all kinds of Digital Lending.