How Fintech Startups are Aiding in Elevating Indian Economy?
In the past few years, fintech startups have witnessed a drastic evolution. This indeed has majorly contributed to the country's economy by benefitting various industries as well as commoners in numerous ways. However, for a country like India with diverse demography and linguistic, developing a financial framework could be quite challenging.
To overcome these challenges, finance experts suggest that financial services, fintech companies, and government regulatory institutions work together to bring in new innovations. Besides, India already has some fintech innovations like tamper-proof e-stamp with its unique identification number, the Government e-Marketplace (GeM), e-Way bill, Trade Receivables Discounting System (TReDS) and more that has simplified the payment procedures.
The Indian fintech sector's transaction value is estimated to be $33 billion as of 2016 and is expected to reach $73 billion in 2020 at a CAGR of 22 percent. As India’s startups and new-age financial services are playing a crucial role in elevating the country's economy to reach $5 trillion mark. India is focusing on developing these fintech startups to boost the country’s economy. Likewise, the Economic Survey 2020 has also suggested that the country could leverage fintech and technology to speed up the process of uplifting the Indian economy.
Hence, India could enforce Strong policies to aid these fintech startups to scale up their growth. According to sources, IFC states that the country’s current credit gap is close to 16.6 lakh crore, and most of these credits are small loans that are requested by rural people, who have minimal or no access to the traditional finance companies. Thus, to addresses this issue and to serve the needy people fintech startups are providing flexible loans. These fintech startups are utilizing cheaper digital payment in combination with innovative delivery models and data science to estimate the creditors’ repaying capacity to evade payment defaults.
With the growing fintech startups in the business arena, the country could soon elevate its economy. Besides, India is also encouraging innovative programs such as ‘Make in India’, tax cutbacks, Startup India and more which would further aid in boost the country's economy to reach $five trillion at the earliest.