SUMMARY
The government said it does not maintain a central database on the investment trends in the fintech space
The government said it aims to strengthen the vision of making India a global fintech hub through UPI and IFSC
Indian fintech sector minted 22 unicorns and bagged $27 Bn in funding between 2014 and H1 2023
There are 3,085 Department for Promotion of Industry and Internal Trade (DPIIT)-recognised fintech startups in the country, the government informed the Parliament on Thursday (July 27).
“Furthermore, DPIIT has recognised startups which are spread across more than 56 diversified sectors. As on 30th April 2023, 3,085 recognised startups are engaged in the finance technology (fintech) sector,” said Minister of State (MoS) for Commerce and Industry Som Parkash in a written reply in the Lok Sabha.
Replying to a question about the investment trends in the fintech space in the last five years, Parkash noted that the government does not maintain central data on this aspect.
Parkash also touted a slew of steps undertaken by the Centre to boost the local fintech ecosystem. Citing initiatives such as the unified payments interface (UPI) and the fintech hub International Financial Services Centre (IFSC), the government said that its initiatives aim to ‘strengthen the vision of making India a global fintech hub.’
Steps taken by the government to promote fintech startups :
- IFSC will promote Indian startup ecosystem especially in the fintech sector by launching fintech entity framework which offers support to startups for developing MVP under regulatory Sandbox
- IFSCA’s incentive scheme offers startup grants, sandbox grant, PoC (proof of concept) grant, accelerator grant, among others
- Jan Dhan Yojana has enabled fintech startups to build technology products to penetrate the large untapped consumer base in India
- Rollout of solutions such as digital KYC and digital signature on documents have created various safeguards for fintech startups to leverage the technology-enabled solutions
- UPI has been built as a scalable payments platform supporting digital payments
- Bharat Bill Payment System has enhanced consumer convenience to pay bills across utilities and other segments
- RBI’s Payments Infrastructure Development Fund (PIDF) scheme aims to subsidise deployment of payment solutions in Tier-III to Tier-VI city centres
- RBI’s regulatory framework recognises P2P lenders as NBFCs, thus, building an alternative credit access for the unbanked
- Licensing of payments banks to enhance financial inclusion and expand access to payments and remittance services
Indian fintech have made rapid strides in the past few years, largely on the back of rising smartphone and internet penetration. With the advent of UPI, the fintech ecosystem in India has only grown further. These fintech startups build on top of the services of existing financial institutions, offering users the ease of access and convenience from the comfort of their homes.
This has spawned the rise of startups such as Paytm and Fino Payments Bank that have gone public, while PhonePe has acquired decacorn valuation. With 22 fintech unicorns, the fintech sector has emerged as an attractive investment proposition for global and domestic investors.
As per an Inc42 report, at $27 Bn, the Indian fintech sector was the second biggest recipient of VC funds between 2014 and June 2023 and accounted for 19% of the total $141 Bn raised by Indian startups during the period.
Going forward, the space is estimated to grow to a market size of $2.1 Tn by 2030, clocking a compounded annual growth rate (CAGR) of 18%.
