Budget 2026: Fintech Sector Expects Policy Push to Strengthen Digital Payments and Bridge MSME Credit Gap
With just a week to go before Finance Minister Nirmala Sitharaman presents the Union Budget 2026 in Parliament on February 1, expectations are rising across industries. The fintech sector, in particular, is looking to the upcoming Budget for targeted policy support to strengthen digital payments infrastructure, address MSME credit gaps, and reinforce trust in financial services.
Industry experts believe India’s rapid adoption of digital payments reflects a fundamental shift in how financial transactions are conducted. What began as a matter of convenience has now become an everyday necessity—spanning neighbourhood retail stores, transportation, healthcare, education, and other essential services.
This transformation has been driven by the success of UPI’s low-cost and interoperable framework, rising smartphone penetration, affordable internet access, and a regulatory ecosystem that has evolved alongside innovation. Together, these factors have enhanced trust, accelerated financial formalisation, and supported the growth of India’s digital payments ecosystem.
Fintech leaders outline key Budget expectations
According to Naren Agarwal, CEO of Wealth1, Budget 2026 could play a pivotal role by introducing measures such as easier access to growth capital, tax incentives for fintech innovation, and rationalisation of GST on technology-led financial services. Continued government backing for digital public platforms like UPI, Account Aggregator, and DigiLocker would further accelerate sector-wide growth.
Agarwal also highlighted the importance of policy support for emerging technologies such as artificial intelligence, data analytics, cybersecurity, and regulatory sandboxes. These initiatives, he said, would help fintech firms scale responsibly, deepen financial inclusion, and strengthen India’s position as a global hub for digital financial services.
Focus on policy continuity and system reliability
Richika Dadheech, Founder and Managing Director of FiatPe, noted that the fintech industry is seeking policy continuity in Budget 2026, with a sharper focus on long-term sustainability.
She explained that while zero MDR has been instrumental in driving adoption and inclusion, differentiated economics for high-volume transactions could help sustain investments in infrastructure, security, and system reliability without impacting small merchants. As transaction volumes continue to grow, strengthening cybersecurity, fraud prevention, and payment resilience will become increasingly critical.
Dadheech added that AI-driven technologies are already transforming fintech operations through real-time fraud detection, system monitoring, and operational efficiency. The next phase of fintech growth, she said, will be defined not only by scale and speed but by reliability, strong customer support, and trust in financial systems.
Four key demands to boost the fintech ecosystem
Sharing his expectations from Budget 2026, Rohith Reji, Co-Founder and CEO of Neokred, said India is at a stage where the India Stack can evolve from a domestic foundation into a global benchmark.
1. Strengthen embedded finance infrastructure
The government’s success with digital public infrastructure has laid a strong base. Fintech leaders now expect policies that further democratise banking-as-a-service. Tax incentives for startups building indigenous financial middleware could enable even non-banking entities to offer advanced financial products, decentralising credit and payments.
2. Bridge the MSME credit gap through Account Aggregator adoption
Despite being the backbone of India’s economy, MSMEs continue to face limited access to formal credit. Mandating and subsidising Account Aggregator integration across financial touchpoints could normalise data-driven lending and reduce reliance on collateral-heavy models.
3. Provide greater regulatory clarity
Expansion of regulatory sandboxes—especially for green fintech and AI-driven compliance—along with a simplified GST structure for fintech service providers, could improve operational efficiency and encourage cross-border innovation.
4. Incentivise financial literacy and cybersecurity
As fintech adoption expands to the next wave of users, experts stress the need for a dedicated fund for cybersecurity research and digital literacy initiatives. Such measures would help ensure that new users enter the formal financial ecosystem with confidence and safety.
As Budget 2026 approaches, fintech stakeholders remain hopeful that targeted reforms and policy clarity will help sustain momentum in digital payments while strengthening credit access, security, and trust across India’s financial ecosystem.
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