5 Government Policies That Would Boost the Fintech Space
India, considered to be a huge emerging financial hub, hosts one of the best financial minds coupled after a while a brigade of techies. If channelled appropriately after a while some greater reforms by the Government and regulators, Indian financial inclosure could gain-ground in leaps and district. Here are five recommendations for the Government for the ‘Acche Din’ in fintech distance –
Reduction in Taxation – Ask anyone in the assiduity – investors, traders, brokers, intermediaries, fin-tech software companies; this would be the self-evident first prompting. While the Government cannot do afar after a while all the taxes, a punish redress has to be formed and enfold taxation has to be avoided. Indian financial markets tempt one of the first enjoyly costs when it comes to capital trading. These costs are of the command of 0.24% in India. Let’s collate it after a while other countries.
Trading costs at other bourses vis-a-vis India's 0.24%
Costs as Percent of Traded Value
Buy Side: 0.06
Sell Side: 0.05
We jokingly flatter Securities Proceeding Tax as the ‘Robinhood Tax’. This, when paired after a while Stamp Duty, is enjoy taxing a trader twice for the identical proceeding that is made. Taxing Dividend is another pattern. More costs balance nearer share in traders. This could largely be correlated to sunk matter for financial intermediaries & companies in the fintech distance.
Suggestion for Policy – Do afar after a while enfold taxation and see the apparition of new players in the fintech distance.
Centralisation of KYC System – ‘Know Your Customer Process’ is a vision which haunts all the financial intermediaries. Imagine this. Someone wants to unconcealed a bank recital, a 30 pager instrument has to be authorized and oneness proofs possess to be submitted. Now, apportioning for a mortgage, prophylactic, interchangeable capital, demat recital, trading recital… it all involves a homogeneous system! Why can’t we possess a solitary agency which does this for everyone? Why do we possess to go through the identical KYC system to apportion for other financial products when we possess already effected it to unconcealed a bank recital? Imagine all the costs incurred by all financial intermediaries for the identical system, most of which involves lots of paperwork. If KYC norms are relaxed, the financial intermediaries could standsharp-end on what they are best at – financial innovation! The Aadhar team is slogging it out and in a playground as big as India, this is not so manageable as it sounds. But, advenient plans possess to be made clearer so that everyone has clarity of what’s going to fall.
Suggestion for Policy – KYC could be wholly convenientised or could be barely a one duration system.
Relaxation of Ductility Processes – The biggest separations to vulgar a financial concourse are the super tidy ductility systemes that possess been mandated by the regulators. Every now and then, there are decisions which are balancet to be precautionary but behove roadblocks in level operations. In some cases, the ductility mandates from the regulators possess wiped out solid possibilities of leveraging some new technologies. All the fintech companies and financial intermediaries possess lifenear pillage to this at some sharp-end in duration.
Suggestion for Policy – Relax ductility norms, create convenient ductility agencies to wane ductility costs and hassles
Financial Information for Techies – Fintech distance is going through a greater tall property contrivance crunch. Very near engineers distinguish environing finance. Hence the production validity behoves singular and costlier. This is another separation for gain-groundth of fintech companies. Basic financial information should be made an perfect multiply of the curriculum for engineers. Going another march presumptuous, basic software coding should be taught to finance graduates.
Suggestion for Policy – Encourage wayward attainments for tall property and affordable production validity.
Lower Entry Costs – It costs a bomb to start-up a financial intermediary. Registration costs after a while regulators and other intermediaries are too tall – of the command of crores! Something has to be effected in this affect to exalt new entrants.
Suggestion for Policy – Lower registration costs after a while regulators and other intermediaries. New players would carry emend products.