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Union Budget Expectation from Fintech / Payment Industry

Ketan Doshi, MD at PayPoint India

For the Payments industry, the honourable Finance Minister should reconsider the complete elimination of merchant discount rate (MDR) on Rupay and UPI transactions, which will support sustainable growth in digital payments.

To further Financial Inclusion in the country, the PMJDY transactions should be exempted from the GST levy. Bank accounts opened under PMJDY are basically of low ticket size. However, the operating cost to service this under-served community is very high till it reaches a substantial base hence the exemption.

Business correspondents, who play a pivotal role in financial inclusion, seek the removal of TDS on cash withdrawals. These Bank Mitras have been burdened with the tax deductions with a huge sum of money stuck in refunds, thereby deeply impacting their services in rural locations. This issue is leading to the drifting away of Bank Mitra from servicing the underserved. Hence it needs to be reviewed at the earliest.

Lastly, this Budget should have enough measures to infuse liquidity, benefiting small and medium enterprises, especially those in the hinterlands. PSU banks must lead these mandates in partnership with FinTech’s – either through co-lending or lead-generation model.

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