“We have represented to the finance secretary about the need to provide budgetary allocation of up to ₹1,000 crore to provide low-cost capital to small- and mid-sized fintechs who have been struggling to survive as funds have become scarce,” said an official, who was part of the meeting.
The request from DLAI is to set up an “India Fintech Fund” on the lines of the Financial Inclusion Technology Fund operated by the National Bank for Agriculture and Rural Development (Nabard). The fund, with an outlay of ₹500 crore, is used to meet the cost of technology adoption for firms promoting financial inclusion.
Fintech industry stakeholders have also stressed the need to send out positive policy messaging regarding the sector.
“Several funding deals have either been postponed or have fallen through due to the negative commentary from policy makers,” said another official. “We have requested the government that positive policy signals should be sent out to bring the industry out of this funding freeze.”
According to the market intelligence firm Tracxn, the Indian fintech sector received $1.9 billion funding in 2024, a 33% decline from the $2.8 billion secured in 2023. The drop in funding is driven by a broader slowdown in demand and geopolitical headwinds, experts said.
The industry participants believe that constant regulatory caution against the sector is also to be blamed.
However, the Reserve Bank of India (RBI), in its latest edition of financial stability report, has cautioned against stress from the consumer credit segment spilling over to secured loans after its assessment showed that nearly 50% borrowers availing credit card and personal loans had another live mortgage or vehicle loan.
Data showed that 11% borrowers originating a personal loan under ₹50,000 had an overdue personal loan and over 60% had availed more than three loans during 2024-25.
Nearly three-fifths of customers who availed personal loans in the quarter ended September had more than three live loans when the loans were sanctioned.
This, in turn, reflected in bank books with unsecured loans contributing 51.9% to fresh slippages of banks at the end of September 2024.
