What Budget 2021 has in store for Fintech

The Fintech sector cheered and welcomed the scheme of Rs 1500 crore announced in the Union Budget 2021-22 by the Finance Minister. The Budget also proposed to set up a world-class Fintech hub at Gujarat International FinTech City at Gandhinagar. Fintech industry carried a major spotlight largely by the Union budget. DFI – Development of Financial institutions bill proposed by the government is surely going to be beneficial to Fintech companies. In order to boost credit facilities to MSMEs and small businesses, DFI will be granted INR 5 Lakh crore. With the scheme proposed to set bad banks, it may lead to cleaner books for the banks as such bad banks would take over the bad debts of the banks. 

Fintech Companies and Union Budget 2021

  • The Government has proposed a bill for setting up Development Financial Institutions (DFI)
  • For boosting the credit facilities to MSME’s and small business DFI will be granted INR 5 Lakh crore
  • With the scheme proposed to set bad banks, it may lead to cleaner books for the banks as such bad banks would take over the bad debts of the banks

The GIFT City

Gujrat International Finance Tech City is going to be a major kick start for the Fintech companies. A planned business city located at the banks of the Sabarmati river would be connecting Gandhinagar and Ahmedabad. The 886 acres of land with a built-up area of 62 Mn sq ft will have retail facilities, office space, hotel, recreational facilities, hospitals, clubs, and residential apartments

The city would be well equipped with all the possible technology and infrastructure meeting the global standards to provide international living and working standards. The multi-service Special economic zone and the first International Financial Service Centre are also the major part of the city

The other features 

The Development Financial institutions are proposed to grant INR 20000 crore so that the small business and MSME’s have good access to credit facilities. This would enhance lending of funds for low capital projects

The Finance minister also proposed to have an Asset management company and Asset reconstruction Company to handle the problems of bad loans. This is supposed to assist banks in having cleaner books which would eventually let them focus on the core activity of lending money

The tremendous increase in the digital payment sector in the recent past especially during the pandemic period had been a target for budget 2021. The proposed scheme of INR 1500 crore would certainly boost digital transactions. This scheme also proposes to offer financial aid for the promotion of digital modes of payment

It is expected that this scheme announced may be also used to cover the losses suffered by the payment companies on zero Merchant Discount Rate and free UPI transactions as well as processing RuPay debit cards. The RBI’s set apart fund of INR 500 crore for PIDF(Payments Infrastructure Development Fund) may also be taken care of. These schemes to support the fintech lenders would surely support the small business houses 

Some reliefs such as on transactions of merchant terminals, Goods and Service Tax transactions are yet not clear but are expected to be cleared up to the finalization of the bill.

Benefits to FinTech companies

The Union Budget 2021 has been a visionary budget for Fintech startup companies and enthusiasts. The benefits that such companies foresee through this budget can be briefed as follows:

  1. The various tax benefits, already set infrastructure in the GIFT city is a huge attraction for potential fintech startups
  2. This is expected to have an inflow of major chunk of foreign funds investing in India
  3. GIFT city is expected to profess the Indian Fintech ecosystem as an independent leader on the global landscape
  4. It is expected that this new avenue would bring global engagement, knowledge sharing, partnership with international counterparts, industry-specific mentorship for the upcoming Indian Fintech startups and companies
  5. There would be better regulation imposed on the fintech
  6. Also, global events can be conducted with ease with the intention of fundraising and collaboration


The schemes for the Digital payments sector and the GIFT city are going to be a great push towards the faster adoption of the digital economy. The recognition of the role of technology in financial services and investment in Internet infrastructure is also a welcome step adopted in the Budget. This Budget is an absolute road map for growth and recovery in 2021