Fintech sector dented parallel economy: PM

Fintech has played a significant role in democratising financial services. It’s festive season in India, there is also festivity in the economy and markets - Narendra Modi, Prime Minister

Mumbai: Prime Minister Narendra Modi on Friday said the government is making necessary policy changes, like removal of Angel Tax, to promote the fintech sector, even as he asked the regulators to take additional measures to check cyber frauds which can have a crippling impact on startups.

Lauding the fintechs for democratising financial services, Modi said the sector, which has attracted $31-billion investment in the last 10 years, has played a key role in denting the parallel economy (black economy). The Prime Minister was addressing the Global Fintech Fest (GFF) 2024, jointly organised by the Payments Council of India, the National Payments Corporation of India and the Fintech Convergence Council.

He said the domestic economy and the capital market are in a celebratory mood at a time when the nation is also going through a festive period. Modi underlined that the government is making all necessary changes on the policy level to assist the fintech sector and gave examples of doing away with angel tax, allocating Rs1 lakh crore to encourage research and innovation in the country and implementing the Digital Personal Data Protection Act. Broadly, fintech refers to entities utilising technologies for providing financial services. Parallel economy is the economic activity that is driven by black or unaccounted money.

Expressing the need to put an end to cyber fraud, he urged the regulators to take major initiatives to boost digital literacy. It is equally important to ensure that cyber fraud does not come in the way of the growth of fintech and startups in the country, Modi said. In his speech, the Prime Minister also cautioned about the dangers of a parallel economy for the world. Fintech, he said, has played an impactful role in denting such a system and credited the emergence of transparency. He said that digital technology has introduced transparency in India and gave the example of the implementation of Direct Benefit Transfer used in hundreds of government schemes that has prevented leakages in the system. “Today, people can see the benefits of aligning with the formal banking system,” he said.

Modi further said the trinity of Jan Dhan, Aadhaar and Mobile have broken down the mentality of ‘Cash is King’ and made way for approximately half of the digital transactions in the world taking place in India. “India’s UPI has become a major example of fintech in the world,” he said, adding that it has enabled 24X7 banking services in every village and city in all weather conditions. Underlining the role of fintech in democratising financial services, the Prime Minister gave examples of readily available loans, credit cards, investments and insurance. He said that fintech has made access to credit easy and inclusive and gave the example of PM SVANidhi scheme that has enabled street vendors to avail collateral-free loans and further expand their business with the help of digital transactions.

“Sustainable economic growth is India’s priority today,” he said and emphasised that the government is creating robust, transparent and efficient systems to strengthen financial markets with advanced technologies and regulatory frameworks.