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Hyd fintech startups still facing gaps in ecosystem

Ernst&Young in its whitepaper recommends Telangana govt to constitute a separate cell to look after and resolve regulatory issues of fintech startups on fast track mode

Hyd fintech startups still facing gaps in ecosystem
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Hyd fintech startups still facing gaps in ecosystem 

Hyd accounts for 42% of fintech cos in India and received consolidated funding of roughly $56 mn. Startups urge the govt to consider 100% relaxation in the criteria of 'prior experience' and 'past turnover' pertaining to public procurement

Hyderabad: With 183 fintech firms based out of Hyderabad, it is the fourth biggest city accounting for 42 per cent of the total fintech companies in India, next only to Bengaluru, Mumbai and New Delhi. Basix Sub-K, CreditVidya, Payswiff, AnyTimeLoan, FincSquare, InstaDApp, Snapmint, CredRight, Magnaquest and ArthaYantra are some of the prominent fintech startups in the city.

These start-ups have received consolidated funding of roughly $56 million. The primary business areas that they cover are funding solutions, credit scoring system, per-to-peer (P2P) lending, financial planning and billing solution. Hyderabad FinTech Forum (HFF) was formed to bring all the start-ups, incubators, corporate, regulators, investors and research institutions at a solitary spot.

Along with the launch of HFF, the CEO of Q-Hub and the Founder of W Hub signed an MoU to enable the growth of fintech market opportunities globally. The fintech startups in the city attempt to mainly bridge the financing-gap conceivable in India's current economy. A white paper on 'Hyderabad - The emerging Start-up Hub in India' was unveiled during Fintech Festival India 2021-2022 held in the city.

Published by Ernst&Young (EY), the white paper took a deep dive into the fintech ecosystem of Hyderabad. It provides insights into the regulatory framework in Telangana, institutional support and capacity enhancement opportunities which will propel the State to become fintech hub of India very soon.

The whitepaper recommends Telangana government to design policies and plan arrangements along with relevant schemes to support the start-up culture in the State. The government may devise a mechanism to invite and identify regulatory issues faced by start-ups. It may constitute a separate cell to look after and resolve these issues on fast track mode.

"It is desired that the government would also consider 100 per cent relaxation to start-ups in the criteria of 'prior experience' and 'past turnover' in public procurement. This would help startups in delivering quality output and cost-effective solutions as they won't need to tie-up with lead bidders or make consortium in order to participate in the competitive bidding process," the whitepaper said.

It further asked the government to empower the startups through enrolling them in acceleration programmes to connect them with investors, to engage in skill development for their employees and to get knowledge support. Additionally, State government may approve budgetary allocation for financing the capital expenses of the start-up companies.

It suggested building a Seed Subsidizing Support System to support the startup environment and assist them with setting up their organisations. The State may consider dedicated annual events for allocation of seed financing to start-ups. The State could consider different models for seed financing, like subsidising interest payments on banks loans obtained from commercial lenders.

N Sharath Chowdary
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