With the nation’s eyes on the upcoming elections, Union Finance Minister Nirmala Sitharaman is poised to present the Union Budget 2024-25, a precursor to momentous financial planning and policy-making.
This budget is highly anticipated by India’s Banking, Financial Services, and Insurance (BFSI) sector as it plays a critical role in India’s economy and is also looking forward to potential developments that could spur its growth. Key focus areas are likely to include the integration of new technologies, attracting more foreign investments, enhancing digital skills, creating job opportunities, and providing insights tailored to the industry. These developments are essential for improving India’s business environment and are expected to be highlighted in the upcoming budget.
The BFSI sector is hoping for policy changes that will encourage innovation and streamline regulatory frameworks. Staying ahead in technology and having supportive regulations are crucial for the sector to remain competitive in the global market.
In anticipation of the budget, there are expectations for increased tax reliefs for individuals, additional incentives for women investors, support for smaller sectors like microfinance, and the resolution of tax discrepancies affecting Indian and international online travel agencies.
Turning to fiscal strategies, the budget is expected to prioritize fiscal consolidation. Projections for FY25 suggest the fiscal deficit might hover around 5.3% of GDP, assuming a nominal GDP growth of 10% year-on-year. This trajectory hints at a more aggressive consolidation approach, especially considering the FY26 target of reducing the fiscal deficit to 4.5% of GDP.
The fiscal deficit target for FY24, pegged at -5.9% of GDP, is also anticipated to be achieved, despite potential deviations in the nominal GDP growth. The gross borrowings are expected to maintain stability at approximately ₹15.1 lakh crore, offset by redemptions of around ₹3.7 lakh crore. Consequently, net bond borrowings are forecasted to be in the range of ₹11.3-11.5 lakh crore, aligning closely with the ₹11.8 lakh crore budgeted for FY24.
As the BFSI sector and the nation at large await the budget announcement, the stakes are high, and the expectations are even higher. The Union Budget for FY 24-25 is not just a financial statement; it is a blueprint for India’s economic future, where the BFSI sector hopes to play a starring role in driving growth and innovation.
Look what BFSI Industry Leaders has to say about the Upcoming Interim Budget:
Shailendra Singh, MD & CEO, BoB Financial
“India is experiencing a significant surge in the utilization of credit cards, particularly with a five-fold rise in demand for travel financing. In light of this, the government should look at exempting international spending of up to Rs 7 lakh from the existing 20 percent Tax Collected at Source (TCS) in the upcoming FY25 budget. This proposed measure aims to boost cross-border commerce, ease transactional complexities for consumers, and stimulate the tourism and hospitality sectors. By fostering a conducive environment for global transactions, we aim not only to enhance the cardholder experience but also to contribute to overall economic growth.”
“In addition, we urge the government to continue its commendable efforts in strengthening the digital infrastructure while prioritising the security of the consumers. Initiatives like UPI integration strongly reflect the regulator’s commitment to innovative solutions, furthering financial inclusion and paving the way for a digitally empowered future.”
Anand Bang, COO – Sales & Marketing, Tata Motors Finance
“As India anticipates the upcoming Union Budget, it is noteworthy to recognize the direct link between government-led infra spending and a flourishing commercial vehicle ecosystem. The demand for commercial vehicles is a crucial metric, reflecting the pulse of the nation’s infrastructure development and driving growth for CV financiers, manufacturers, and OEMs. Policy measures and fiscal initiatives needs to continue to orient with infrastructure development, alongside ensuring robust capitalization in NBFC sector. As NBFCs are emerging as frontrunners in pivoting the nation’s economic trajectory, the upcoming budget requires to maintain a strategic outlook for NBFCs, particularly accounting their reach, technological advances, and capabilities in understanding the financial needs of the unbanked and underserved populations to fully tap the entrepreneurial aspirations of India Inc.”
Vighnesh Shahane, MD & CEO, Ageas Federal Life Insurance
“We have been asking the government to introduce a separate tax deduction limit for life insurance for the last 5 to 6 years but nothing has happened. The reason is that the current Section 80 C is too cluttered where a person can claim deductions up to Rs 1.5 lakh for PPF, Sukanya Samriddhi Scheme, ELSS, tax saving fixed deposits, school fees, principal sum of a home loan, including life insurance.
The other demands are to make pensions tax-free in the hands of annuitants. The current Rs 50,000 tax exemption for the National Pension Scheme under Section 80CCD(1B) should also apply to pension and annuity plans of insurance companies to provide a more level playing field.”
Also Read | 2023 Retrospective: Transformative Trends in India’s BFSI Sector
Niraj Kumar, Chief Investment Officer, Future Generali India Life Insurance Company Ltd.
“With Budget 2023 being characterized as a Pro growth and Capex oriented budget, we reckon Budget 2024 to be another elixir to sustain the current pace of economic growth. The government will adeptly do a fine balancing act of sticking to the fiscal prudence path, while focusing on pro-growth measures. With the backdrop of India’s goldilocks economic landscape viz. receding inflation, resilient GDP growth, contained CAD, the Interim Budget 2024 is likely to leverage on the same and try to pump prime the economy. The focus will continue to be on structural growth enablers such as continuing focus on infrastructure, additional sectors under PLI (production-linked incentive) scheme for manufacturing push and sustained push towards green energy transition. The budgeted capex orientation is likely to stay although the growth is likely to moderate from its peak 35% growth seen in the recent past. Besides with the impending pivot of Monetary policy towards the rate cut cycle, the fiscal pro-growth measures would get the requisite support and manifest in the growth numbers. Importantly as it’s a Pre-election Interim Budget, the focal point would continue to be upliftment and growth of the bottom of the pyramid by way of announcing some welfare measures on rural / Agri schemes. Overall, we expect the budget to give the requisite structural push for economic growth.”
Sharad Mathur, Managing Director & Chief Executive Officer, Universal Sompo General Insurance Company Limited
“As Indian insurers leverage advanced technologies like data analysis, IoT, and Artificial Intelligence to innovate and offer customized insurance solutions, the insurance sector’s crucial expectation would be to see more policy reforms and fiscal support for initiatives that are aimed at enhancing India’s insurance penetration. To fulfil the vision of ‘Insurance for All by 2047’, it will be crucial to improve insurance awareness among the masses and encourage citizens to enhance their insurance coverage. While IRDAI’s Bima Vahak, Bima Vistaar and Bima Sugam initiatives are indeed great and touted to give a big fillip to the insurance inclusion objective, extending further tax benefits on the purchase of insurance products should greatly support achieving the objective. To encourage the insured population to improve their insurance coverage, amendments can be made to Section 80D to increase the deduction limit for medical insurance premiums by a quantum of Rs.25,000 for both individuals and senior citizens. Similarly, in order to improve insurance uptake of the Pradhanmantri Jeevan Jyoti Bima Yojna and make insurance more affordable, the Goods and Services Tax (GST) on such essential term insurance policies can be reduced or set to 0%. These measures should serve to lower insurance premiums and support more Indians in financially securing their future. Finally, in a bid to incentivize first-time retail investors to invest in India’s equity schemes, consideration can be made to reintroduce Section 80CCG and motivate the youth to kickstart their wealth creation journey.”
Vishnu Dusad, Co-Founder & Managing Director at Nucleus Software
“We eagerly anticipate a forward-looking budget that prioritizes digitization in the fintech and banking space. We commend the government’s recent regulatory enhancements and hope for supportive measures that nurture responsible financial services innovation going forward. Incentivizing financial services/ fintech’s in underserved areas will be crucial for building a resilient distribution infrastructure, fostering lasting financial inclusion. We remain optimistic about policies that drive sectoral growth, enhance outreach, and amplify India’s digital presence, aligning with our vision for a digitally empowered future.”
Dilip Modi, Founder, Spice Money
“As we approach the upcoming Union Budget, it is imperative to recognize the pivotal role played by transformative innovations and developments in the fintech industry. The technological strides in this sector not only redefine our domestic financial landscape but also harbor the potential to reshape the global perception of Indian fintech.”
“In the realm of Indian fintech, the expectations for the 2024 budget are substantial. A key anticipation is the fortification of the regulatory framework for the fintech industry in India. The unveiled draft framework aimed at regulating fintech activities stands as a testament to the acknowledgment of the escalating influence of fintech companies. Upon finalization, this framework holds the promise of guiding and nurturing responsible growth and innovation within the Indian fintech sector, contributing significantly to financial inclusion and broader economic advancement—a focal point we anticipate the budget to address.”
Atul Garg, Founder, FinEzzy
“The Union Budget of India is a crucial event for fintechs, particularly digital lending platforms that offer credit against financial assets for lending institutions. A key expectation from the budget is a strategic focus on enhancing the loan-to-value (LTV) ratios on deserving schemes. Traditionally, LTV ratios have been static, but there is a growing demand for more dynamic and flexible LTV frameworks. This change could enable lending platforms to offer more tailored financial solutions to their customers, particularly in scenarios where the value of pledged assets fluctuates.”
“Another significant expectation is the inclusion of fintechs in the consent-based data sharing ecosystem, such as the Account Aggregator (AA) framework, even though they are not directly regulated by IRDAI, RBI, or SEBI. This inclusion would allow fintechs to access a wider pool of financial data, subject to customer consent, which can be instrumental in improving credit assessment, risk management, and customer service. The integration into the AA ecosystem would mean fintechs can leverage data more efficiently, leading to better financial products and services for consumers.”
Manish Maryada, Co-founder and CEO, Fello
“The upcoming 2024 interim Budget provides an opportunity to strategize the sustainable growth of FinTechs in India. A promising approach is integrating credit card services into UPI platforms, offering significant potential. Establishing a comprehensive regulatory framework for digital banking is crucial to ensure a secure and inclusive financial landscape.”
“Additionally, introducing policies supporting new FinTech products like Prize Linked Savings (PLS) can facilitate the seamless expansion of digital financial services nationwide. These initiatives aim to enhance inclusivity, making progress towards a more accessible financial landscape and strengthening the FinTech sector.”
Akash Sinha, CEO & Co-Founder, Cashfree Payments
“In the Union budget 2024-25, the government should further push for initiatives that will focus on boosting adoption of digital payments in tier 2 and beyond regions. Policies should incentivise creation of a fertile environment for fintech startups to innovate and build products and solutions that will be more inclusive, adaptable for both consumers and businesses. I also expect the introduction of regulatory frameworks that will help curb digital fraud and build a safer and more secure digital payment environment, reinforcing the trust of users in digital transactions. There is a call for the implementation of a standardized KYC framework across all financial services, aiming to enhance efficiency and promote financial inclusion, in a secure way. Overall, the budget should also announce some provisions to ease financial burden on fintechs and provide tax saving benefits to startups in the sector.”
Nirav Choksi, CEO & Co-founder at CredAble
“Last year, the Union Budget tabled by the Honourable Finance Minister, Nirmala Sitharaman was a progressive one, listing the seven top priorities that would guide the government through the Amrit Kaal.”
“Ranking as the third largest FinTech hub, India is at the forefront of global growth. FinTechs in India have demonstrated remarkable resilience over the years, backed by timely regulatory support and strong business fundamentals. India’s distinctive digital public infrastructure has been an undeniable driving force behind the upward trajectory of the FinTech sector.”
“The upcoming Union Budget in 2024 presents an opportune moment to chart the course for the sustainable growth of FinTechs in the Indian economy. Introducing incentives for FinTechs committed to empowering underprivileged SMEs through financial and technical support would be a much-welcomed move. Additional measures, such as maintaining the profitability of state-owned banks, enhancing credit guarantee schemes for MSMEs, introducing PLI schemes, and augmenting subsidies for small businesses, are eagerly anticipated. The financial services industry also expects key announcements pertaining to the management of Non-Performing Assets (NPAs).”
“Despite the finance minister signalling a lack of major announcements in the forthcoming budget before the 2024 general elections, the FinTech sector remains optimistic about the government’s commitment to implementing policies that foster sectoral growth, enhance outreach, and amplify India’s digital presence.”
Madhusudan Ekambaram, Co-Founder & CEO, KreditBee
“In 2024, amidst a global economic growth projection of 3%, India stands out with an impressive 6.3% growth forecast. This growth is attributed to robust financial inclusion, strong consumer demand, a youthful demographic, and improving trade balances. However, challenges loom, including disruptive forces like higher interest rates, regulatory assertiveness, climate change, and geopolitical tensions. In the financial sector, innovative banking models, digital payment reforms, and the rise of fintechs are set to boost India’s financial inclusion and credit cycle. The focus now shifts to enhancing digital inclusivity, with banks and NBFCs spearheading digital transformation initiatives.”
Arun Nayyar, MD and CEO, NeoGrowth
“MSMEs are the driving force of India’s economic growth and prosperity. To fully unlock their potential, the upcoming Union Budget should focus on measures that would improve access to liquidity, skill development, and ease of doing business for small businesses. The government could also focus on encouraging the use of digital public infrastructure which will help improve access to credit for MSMEs. Digital payments are another crucial link in formalisation of MSME business operations. Continuing to encourage digital payments will improve the creditworthiness of these MSMEs.”
George Alexander Muthoot, Managing Director, Muthoot Finance
Indian households possess up to 25,000 tonnes of gold which lies idle and can be leveraged as an immediate and reliable source of financing to meet immediate personal or business needs. Granting ‘priority sector status’ to gold loans and allowing a ‘Gold linked credit line via UPI’ can go a long way to help households/small business owners meet their financing needs and monetise idle gold jewellery.
We believe giving priority sector status to eligible gold loans will benefit the bottom of the pyramid and enhance financial inclusion. Typically small borrowers need loans under Rs 50,000 (about 20 grams of gold collateral) for short durations like a year. Herein gold loan NBFCs can play an important role to fulfill the needs of small borrowers, self-employed, micro business owners, and help address their finance needs or working capital needs. Gold loans against jewellery also is a vital funding source for MSMEs. Gold loans provided by banks to farmers do get priority sector status, but not gold loans provided by NBFCs. Extending priority status to all micro gold loans (under Rs. 50,000) by removing the current distinction between NBFCs and banks can enable gold loan NBFCs access to increased funding.
Santosh Agarwal, Chief Business Officer – Life Insurance, Policybazaar
The impending Budget 2024, and the insurance sector eagerly supports the prospect of an increased tax benefits limit to boost insurance penetration in India. Tax relief has historically catalyzed insurance adoption, aligning with IRDAI’s vision of insuring India by 2047.
Key expectations from this year’s Budget include a reconsideration of taxes on the entire insurance category to achieve a fair balance. Proposals include establishing a dedicated exemption category for term insurance, addressing the current exhaustion of the Section 80C deduction limit of Rs 1,50,000 due to other allowable expenses. Additionally, a reevaluation of the 18% GST rate aims to ensure pricing benefits reach end consumers, fostering increased life insurance investments.
Recognizing the tendency to defer retirement planning, equal tax treatment for pension products is emphasized, aligning them with the National Pension Scheme (NPS). Proposals advocate a tax-free status for annuity income derived from pension products to encourage wider adoption and enhance parity with other investment avenues.
In the post-pandemic era, the significance of health insurance is underscored, prompting calls for innovative tax structuring. Suggestions include increasing the maximum deduction limit for self, spouse, and dependent children to Rs 50,000, and for senior citizen parents to Rs 1 lakh. Additionally, extending tax exemptions to Health Savings Accounts is proposed to empower individuals in planning for escalating healthcare expenses.
Aditya Gupta, Founder & CEO, Credilio
We are optimistic about the upcoming budget and hopeful that the focus on fortifying digital financial infrastructure demonstrates a commitment to advancing financial technology.
After the recent regulatory enhancements, allowing tax breaks should create a conducive environment for fintech innovation, empowering fintechs to explore new avenues responsibly.
We would be eager to see emphasis on incentivizing fintech in under-serviced areas which complements our objective of creating a robust distribution infrastructure for financial inclusion. Thus government support is pivotal in catalysing positive change at the grassroots level.
Recognition of fintech’s role in empowering MSMEs and SMEs, coupled with targeted incentives for Tier 2, 3, and 4 cities, should highlight a strategic push toward lasting financial inclusion.
Additionally, the consideration of permitting NBFCs to offer credit cards acknowledges fintech’s evolving landscape, showcasing a commitment to adapting to changing financial dynamics will be a big win for the financial sector and the nation.”
Nalin Negi, Chief Financial Officer, BharatPe
“As India sets sight on becoming a US$ 5 trillion economy by 2025, the upcoming Interim Budget offers a timely opportunity to formulate policies that further unlock the potential of fintechs in enabling financial inclusion and powering their growth. I am hopeful that the government will announce measures to increase capital availability for fintechs operating in underserved domains like rural credit, digital payments, and digital lending. Regulations around digital banking, data governance and emerging technologies have fueled the building of sustainable fintech businesses over the last year or so, and I am hoping that the budget will introduce additional measures that can aid credit growth, financial inclusion and digital enablement of financial services.
It would also be good to see tax benefits and favourable initiatives for research, product innovation and skill development being introduced, so as to encourage indigenization that can help India emerge as the global innovation hub. Additionally, in order to nurture the blooming startup ecosystem, the Government should further broaden the eligibility criteria and look at providing tax reliefs to employees in start-ups around Employee Stock Ownership (ESOPs). I am optimistic that this budget will set the stage for enhanced collaboration between fintech innovators and policy makers to nurture an ecosystem that can equitably power India’s digital economic aspirations.”
Ranjan Kumar- Head of Accounts & Finance, RupeeRedee
“We are looking forward to the upcoming Union Budget, especially because fintechs like digital lending platforms expect some important changes. One big focus is on making Loan-to-Value (LTV) ratios more flexible. Instead of sticking to fixed rules, lenders want to adjust them based on how the value of assets goes up and down. This change is meant to help lending platforms create more personalized financial solutions for the underserved. In order to stimulate growth in the fintech sector, it is essential to facilitate easier and more cost-effective credit access for fintech players. Simultaneously, the government’s provision of tax breaks to fintech companies would create an enabling environment for innovation, empowering these entities to explore new avenues. These strategic measures are crucial for fostering a dynamic and thriving ecosystem within the fintech industry. Another thing we are hoping is to be part of a system where the data can be shared with consent. Even though we’re not directly regulated by organizations like IRDAI, RBI, or SEBI, we want to join a system called the Account Aggregator framework. This would give us access to a wider range of financial data, but only if customers agree to it. Being part of this framework is crucial because it would help us use data more effectively. We believe it will make it easier to assess credit, manage risks better, and provide better overall service to the customers.”
Yogesh Gupta, Chief Business Officer, Bimaplan
“In the upcoming budget, we eagerly anticipate policies from the government that attract both domestic and foreign capital, fostering growth in our country’s startup ecosystem. Offering tax credits for early-stage startups is crucial for incentivizing innovation and we are hoping that the government will address the ongoing concern on angel tax, paving the way for smoother operations. We also hold high expectations for substantial changes in medical insurance premiums, aiming for a more affordable and accessible healthcare landscape. Additionally, we hope for an extension of section 80D deduction, providing continued support for medical insurance premiums. Recognizing the importance of flexibility, especially for our seniors, we look forward to policies that cater to their unique needs, ensuring inclusivity in our financial framework.”
Jayesh Jain, Group CFO, Balancehero India
“The interim budget of 2024 offers an opportunity for the government to catalyse innovation and inclusivity within the digital lending sector. We expect that the government will put a greater emphasis on creating a more stable and efficient digital infrastructure for the industry. We also propose that the government establish a Fintech Fund, more specifically for Lendtech. Companies with their own NBFCs should be given priority, and they should receive more affordable debt.
To invest in the future of our economy, strategic support for fintech and lendtech is essential. The banks generally avoid lending to fintech companies with BBB ratings. Encouraging banks to collaborate with BBB-rated fintechs can help banks diversify their lending portfolios. This will lead to a more balanced and resilient lending space. Micro-personal loans should also be classified as PSL (Priority Sector Lending) in the budget to support financial inclusion. Furthermore, offering tax incentives to fintech and lendtech entities operating in the personal loans segment would prompt these companies to provide affordable credit to SMEs and individuals in Tier 2, 3, and 4 cities, fostering local economic development. This promotes financial inclusion and aligns with the vision of driving innovation and contributing to a more robust Indian economy, striving towards a USD 5 trillion GDP as envisioned by the honourable Prime Minister.”
Nanda Kumar, Founder & CEO, SunTec Business Solutions
“The Union Budget that lies ahead has far-reaching implications beyond being another normal budget. It has the power to spark transformative change within India’s BFSI sector (Banking, Financial Services, and Insurance). As I look ahead, I firmly believe that the impending policies must prioritize integration of fintech, utilizing measures like streamlined regulations and tax incentives for leveraging our digital infrastructure in a far better way. More than ever, emphasis must be placed on advancing digital proficiency in the workforce, enabling us to fully unleash the potential of AI, blockchain, and automation. With its impact on the global stage in mind, this budget can solidify India’s position as a leading FinTech and innovation hub, attracting foreign investments and fueling local innovation. It is crucial that such measures be included in the budget to propel our nation forward. The goal of being a USD 5 trillion economy that our Hon. Prime Minister pointed out is certainly not beyond us.”
Harshvardhan Lunia, Founder & CEO, Lendingkart
“In the face of external headwinds India has only showcase resilience and an upward growth trajectory. We expect this momentum to continue. It will be essential that funding support to credit guarantee schemes to support the MSMEs is further strengthened with assurance of consistency and continuation. This will help ensure MSMEs get easier credits. Furthermore, government should continue to expand the digital infrastructure to support deep penetration of financial services which reduces the cost of delivery of services.
Another critical aspect is ONDC (Open Network for Digital Commerce and OCEN (Open Credit Enablement Network). It shall be supported to create incentives for investment in technology and R&D. The major investments of FinTech’s happen in technology. If some budgetary allocations can be made to provide some relief to FinTech’s, it would help extend digital reach. Lending Fintech’s (especially those operating in MSME segment) borrow at high rates which in turn results in high-cost products for small businesses. If the government can provide some funding support to such digital lenders, it would help trickle down the benefit to small businesses.”
Amit Mohan, President – Logistics & Infrastructure, Kotak Mahindra Bank
“The upcoming Union Budget can be a directional budget for many core areas even though it is a “vote on account” before the general elections. The government is expected to ensure continuity in policies and investment in strategic areas to spur the domestic demand while managing the inflation. The focus is likely to be on infrastructure, healthcare and green and sustainable energy. The government may continue to take concrete steps towards an integrated logistics and infrastructure model while the digital infra can get a boost to unlock the true potential of a connected nation. Fiscal consolidation will be a priority given the flexibility and buoyancy provided by the high tax collections and the 7.6% GDP growth last quarter,”
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