Fintechs and business correspondents focused on financial inclusion have requested equity funding support from the Union government. Industry experts have indicated that an allocation of approximately ₹500 crore in the upcoming budget would significantly benefit the sector.
The proposed fund could enhance technology at these firms, which provide services such as processing domestic remittances, opening Jan Dhan accounts, and offering government-backed insurance policies for rural populations.
“Similar to the IMEF (India Microfinance Equity Fund), an IBCEF (India Business Correspondent Equity Fund) may be created as a consortium between the Indian government and banks and FIs (financial institutions),” Dharanidhar Tripathy, chief executive of the Business Correspondents Resource Council, wrote in a letter addressed to the secretary of the Department of Financial Services (DFS).
Tripathy said that a retail outlet offering these services in rural India would need an estimated ₹10,000 for basic technology upgrades.“At around four to five lakh such agents, an outlay of around Rs 500 crore would be required,” he said. “Currently, agents are buying printers, mobile ATMs and such devices with their funds,” he added.
The appeal for government equity support comes amid a challenging funding environment for fintechs and growing pressure on business margins for last-mile service providers.
In a meeting with the DFS secretary on January 17, the broader fintech industry requested a ₹1,000 crore fund from the government to improve capital availability for sectors such as digital lending.
Industry insiders familiar with the discussions revealed that a similar request for a dedicated fund was presented to the finance ministry during last year’s Union Budget. However, they pointed out that the issue did not advance beyond preliminary discussions.
In this year’s budget wish list, rural fintechs have requested tax reductions and an expansion of the Kisan Credit Card limit, citing rising agricultural product prices. The industry also urges the government to encourage banks to raise commissions for bank mitras—physical agents who offer last-mile banking services.
The industry also wants the government to push banks to increase commissions for physical agents who provide last-mile banking services, popularly referred to as bank mitras.
“The DFS had a meeting on financial inclusion with banks and BCs on January 17. They raised the demand for higher commission payouts from banks, which had not been revised for years. The secretary asked banks to look into the demand,” said another industry executive who was present at the meeting.