Fintech

India’s Fintech Landscape: 3,085 Recognized Startups Flourish, Says Government

• ByStartupStory     |    July 28, 2023

The government informed Parliament on Thursday (July 27) that there are 3,085 fintech startups recognized by the Department for Promotion of Industry and Internal Trade (DPIIT) in the country. Further, DPIIT has recognized startups that are spread across more than 56 diversified sectors. As of April 30, 2023, 3,085 recognized startups are engaged in the finance technology (fintech) sector,” said Minister of State (MOS) for Commerce and Industry Some Parkash in a written reply in the Lok Sabha. Responding 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. These startups are spread across more than 56 diversified sectors, with 3,085 specifically engaged in the finance technology (fintech) sector as of April 30, 2023. The Indian fintech sector has seen significant growth, receiving $27 billion in venture capital funding between 2014 and June 2023, making it the second-largest recipient among Indian startups during that period. It accounted for 19% of the total $141 billion raised by startups in India.

Looking ahead, the fintech space is expected to experience remarkable growth, projected to reach a market size of $2.1 trillion by 2030 with a compounded annual growth rate (CAGR) of 18%. Parkash also touted a slew of steps the center undertook 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:

The IFSC (International Financial Services Center) is playing a crucial role in promoting India’s startup ecosystem, particularly in the fintech sector. It has introduced a fintech entity framework that provides valuable support to startups in developing Minimum Viable Products (MVPs) within a regulatory Sandbox. Additionally, the IFSCA (International Financial Services Centres Authority) offers a comprehensive incentive scheme, including grants for startups, sandbox initiatives, Proof of Concept (PoC) grants, and accelerator grants, among others.

The Jan Dhan Yojana has emerged as a catalyst for fintech startups, enabling them to create technology-driven products that target the vast untapped consumer base in India. The introduction of digital KYC and digital signature solutions has further strengthened the fintech landscape, providing startups with crucial safeguards and leveraging technology-enabled solutions.

The scalability of the Unified Payments Interface (UPI) has been instrumental in supporting digital payments and has significantly contributed to the growth of India’s fintech ecosystem. Moreover, the Bharat Bill Payment System has revolutionized consumer convenience by simplifying bill payments across various utilities and segments.

To foster financial inclusion and facilitate payment solutions in Tier-III to Tier-VI cities, the RBI (Reserve Bank of India) has implemented the Payments Infrastructure Development Fund (PIDF) scheme, which offers subsidies for deployment.

Recognizing peer-to-peer (P2P) lenders as Non-Banking Financial Companies (NBFCs) has been a progressive step by the RBI, creating an alternative credit access avenue for the unbanked population.

Furthermore, the licensing of payment banks has significantly expanded financial inclusion, enhancing access to payment and remittance services across the country.

Driven by increasing smartphone and internet penetration, Indian fintech startups have made remarkable progress in recent years. Their innovative solutions build upon existing financial institutions’ services, offering users unparalleled ease of access and convenience from the comfort of their homes.

Overall, the concerted efforts of various government initiatives, regulatory frameworks, and technological advancements have contributed to the thriving fintech ecosystem in India, opening up new opportunities for startups and transforming the financial landscape for the better.

The government has taken several initiatives to promote fintech startups, including the launch of the fintech entity framework in the International Financial Services Centre (IFSC), offering various incentives and grants to startups, and implementing solutions like UPI and the Bharat Bill Payment System to enhance consumer convenience and financial inclusion.

The fintech sector’s success has led to the emergence of startups such as Paytm and Fino Payments Bank going public and PhonePe achieving a decacorn valuation. With 22 fintech unicorns in the country, the Indian fintech sector has become an attractive investment opportunity for both global and domestic investors. This growth has been fueled by increasing smartphone and internet penetration, enabling fintech startups to offer users ease of access and convenience from the comfort of their homes.

In summary, the fintech sector in India has flourished, supported by government initiatives and technological advancements, and it continues to be a promising area for investment and innovation.

 

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