P2P Industry seeks financial inclusion in Budget

By Rajiv M Ranjan

1. Better financial inclusion

While a great boost to the P2P industry would be via the regulator easing lending caps, we look forward to a critical role from the finance ministry for better financial inclusion by extending certain percentage exemption via Section 80C and also the flexibility of handling defaults under a capital loss. These steps will ensure a great reach as an asset class and also better credit access to customers.

2. Mobilising individual savings

One of the simplest ways to do it is to make investments in P2P lending, tax-free, akin to investments in certain mutual funds and other such investments can, perhaps, be placed under Section 80C of Income Tax law. A lender should be allowed to set off or carry forward his losses as currently prevalent in other forms of investment. The same set of rules that exist for short-term and long-term capital losses can apply and there need not be any new provisions, especially for P2P.

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3. Making P2P as attractive as MFs

It would be great if our industry is also given tax exemptions under the Income Tax Act. Tax exemptions can solve MSME and consumer credit woes as P2P will become more attractive for lenders. More supply of lenders will lead to more credit going into the economy.

4. End credit woes of MSE

The Interim Budget is a great opportunity for NDA government to win back the trust of micro & small enterprises and start-ups. Getting access to institutional credit has been one of the major problems of the MSEs. It’s time the government looks at alternative financing option like P2P lending to solve the credit crisis. MSEs make about 65 per cent of the enterprises of India and contribute around 20 per cent of the overall GDP. P2P lending platforms can channelize idle wealth of Indian middle class. To encourage retail investors to participate more in lending activities at P2P lending platforms, the interim Budget should waive off tax on the interest earned by an individual investor through P2P lending.

Also Read: Reserve Bank regulations for P2P lending platforms

The author is Founder & CMD at PaisaDukan