The interim new government focused on a number of important industries, including drones, agritech, fintech, cryptocurrency, and online gambling.
As India prepares to welcome the new government, the country’s start-up ecosystem is awaiting announcements on the fate of the existing policies and realisation of the announcements made during the Interim Budget 2024.
The interim government was particularly interested in the following major industries: drones, agritech, fintech, cryptocurrency, and online gambling. Concerns were voiced by a number of ministers, parliamentarians, and leaders of regulatory organisations over the necessity of more stringent regulations to control the exploding number of start-ups in these industries.
But above all, the finance ministry and other market regulators paid close attention to fintech start-ups that concentrated on digital lending. Nirmala Sitharaman, the departing finance minister, was observed discussing the need to regulate digital lending apps while addressing to the Parliament.
Over the past few years, the fintech industry has seen some significant advancements, including:
- RBI’s crackdown on Paytm’s 30% market cap was imposed by NPCI to break the duopoly of PhonePe and Google Pay in the UPI payments industry.
- According to NPCI data, fintech applications are outpacing banks in the battle for UPI payments.
- Listing of businesses on the India International Exchange, situated in GIFT City
In an effort to strengthen the ecosystem, Sitharaman met with 10,244 fintech companies in India in February of this year, accompanied by other ministers and regulatory body leaders.
The meeting saw the announcement of several initiatives that supported start-ups and fintechs, including Aadhar, UPI, and API Setu. Other initiatives that helped the start-up ecosystem in India included regulatory sandboxes, fintech repositories, SRO Frameworks for fintech, and simplified company incorporation.
In order to ascertain what lies ahead for the industry as the incoming government gets ready to assemble its cabinet, we spoke with Ramesh Punugu, Global Head Buy Side Research at Acuity Knowledge Partners.
India’s fintech adoption rate is 87%, higher than the global average of 64%, according to the Global Fintech Adoption Index 2023. This indicates that India has surpassed the global average in terms of digital adoption thanks to continuous financial inclusion initiatives like the Pradhan Mantri Jan Dhan Yojana.
He went on to say that demonetisation and aggressive new government promotion had caused digital payment systems in India to flourish exponentially. UPI transactions grew by 49% year over year, from 9.4 billion in May 2023 to 14.0 billion in May 2024. Over the same time span, the average daily volume of transactions grew from 303.7 million to 452.8 million. A total of 167 banks were added to the UPI network in just one year, as seen by the rise of bank connections from 414 in April 2023 to 581 in April 2024.
Speaking about the ecosystem’s overall structure, he added that the continuation of the new government is anticipated to support India’s fintech and start-up industries even more. Growth and innovation are anticipated to be fueled by new government initiatives, expanded finance options, and a supportive regulatory framework.