{"id":3093,"date":"2021-03-30T19:33:47","date_gmt":"2021-03-30T14:03:47","guid":{"rendered":"https:\/\/cashfree.com\/blog\/?p=3093"},"modified":"2023-01-03T16:46:53","modified_gmt":"2023-01-03T11:16:53","slug":"union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues","status":"publish","type":"post","link":"https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/","title":{"rendered":"Union Budget 2021\u2019s GIFT To The Payments Industry And Overcoming Zero MDR Issues"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_81 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a8f044180f86\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #364250;color:#364250\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #364250;color:#364250\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a8f044180f86\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#The_Digital_Payments_fund_and_options_for_incentives\" >The Digital Payments fund and options for incentives<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#GIFT_City_and_possibilities_for_the_payments_industry\" >GIFT City and possibilities for the payments industry<\/a><\/li><\/ul><\/nav><\/div>\n\n<p class=\"wp-block-paragraph\"><strong>A slightly modified version of this article was first published on<a href=\"https:\/\/inc42.com\/resources\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/\" target=\"_blank\" rel=\"noreferrer noopener\"> Inc42 Media<\/a> dated March 23rd, 2021.<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The payments industry has had a mixed reaction to the Union Budget<span id='easy-footnote-1-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-1-3093' title=' Government of India Publications: &lt;em&gt;Budget 2021-2022 Speech of Nirmala Sitharaman Minister of Finance&lt;\/em&gt;, dated February 1, 2021.'><sup>1<\/sup><\/a><\/span>&#8211; disappointment with the unchanged zero MDR stand, but looking forward to the earmarked Rs.1500 crores and the alternative reliefs\/boost it may bring. An upcoming scheme is to outline how the funds will be deployed- predictions here range from further support to the Payments Infrastructure Development Fund (\u2018PIDF\u2019)<span id='easy-footnote-2-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-2-3093' title=' RBI Notification: &lt;em&gt;Operationalisation of Payments Infrastructure Development Fund (PIDF) Scheme&lt;\/em&gt;, RBI\/2020-21\/81, dated January 05, 2021.'><sup>2<\/sup><\/a><\/span> to alternative merchant\/customer incentives. Also awaited by the payments industry is a fintech policy for the Gujarat International Finance Tec-City (GIFT)<span id='easy-footnote-3-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-3-3093' title=' Website of Gujarat International Finance Tec-City. '><sup>3<\/sup><\/a><\/span>, which was expected sometime post Budget. With the Budget\u2019s promised&nbsp; support for a \u2018world-class\u2019 Fintech Hub there, and the policy reportedly<span id='easy-footnote-4-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-4-3093' title=' Media Report by Kapil Dave: &lt;em&gt;New fintech park proposed by Gujarat for GIFT City&lt;\/em&gt;, The Times of India, updated on January 28, 2021.'><sup>4<\/sup><\/a><\/span> also having payments companies on its radar to boost infrastructure at GIFT, this is a second promising sign, with possible new avenues for servicing GIFT entities.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"The_Digital_Payments_fund_and_options_for_incentives\"><\/span><strong>The Digital Payments fund and options for incentives<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Methods to incentivize digital payments can range from disincentivizing cash payments (2% TDS on specified cash withdrawals<span id='easy-footnote-5-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-5-3093' title=' Section 194N: Payment of certain amounts in cash, Income-tax Act, 1961.'><sup>5<\/sup><\/a><\/span>), regulatory steps (amending the Income Tax Act<span id='easy-footnote-6-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-6-3093' title=' Finance (No. 2) Act, 2019. '><sup>6<\/sup><\/a><\/span> to allow electronic payments), anti-black money measures (no cash payments above Rs.20k for immovable property transactions<span id='easy-footnote-7-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-7-3093' title=' Section 269SS: Mode of taking or accepting certain loans, deposits and specified sum, Income-tax Act, 1961.&amp;nbsp;'><sup>7<\/sup><\/a><\/span>), typical fiscal\/financial incentives (proposed GST cashbacks<span id='easy-footnote-8-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-8-3093' title=' Media Report by Dipen Pradhan: &lt;em&gt;GST Council Approves A Pilot To Give Cashback, Sets Up A Panel To look into MSME Issues&lt;\/em&gt;, Inc42, dated August 06, 2018.&amp;nbsp;'><sup>8<\/sup><\/a><\/span>), etc., as often taken in past budgets. The 2019 Budget\u2019s infamous zero MDR<span id='easy-footnote-9-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-9-3093' title=' Section 10A: Bank, etc., not to impose charge for using electronic modes of payment, PSSA, 2007, inserted vide Finance (No. 2) Act, 2019.&amp;nbsp;'><sup>9<\/sup><\/a><\/span> is another form- regulating MDR, as is mandating digital payments (mandatory UPI and RuPay<span id='easy-footnote-10-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-10-3093' title=' Section 119AA: Modes of payment for the purpose of section 269SU, Income-tax Rules, 1962, inserted vide Income-tax (16th Amendment) Rules, 2019.&amp;nbsp;'><sup>10<\/sup><\/a><\/span>). Even this budget has such incentives via the enhanced tax audit exemption<span id='easy-footnote-11-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-11-3093' title=' Clause 11: Amendment of section 44AB, The Finance Bill, 2021.&amp;nbsp;'><sup>11<\/sup><\/a><\/span> to businesses with sales below Rs. 10 crore (previously Rs. 5 crore<span id='easy-footnote-12-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-12-3093' title=' Section 44AB: Audit of accounts of certain persons carrying on business or profession, Income-tax Act, 1961.&amp;nbsp;'><sup>12<\/sup><\/a><\/span>) and 95% digital transactions.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Turning to the upcoming scheme and its focus on financial incentives, one possibility is direct financial incentives like those previously taken, like Meity\u2019s erstwhile MDR reimbursement scheme<span id='easy-footnote-13-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-13-3093' title=' Ministry of Electronics and Information Technology Notification: &lt;em&gt;Subsidizing MDR charges on Debit Cards\/BHIM UPI\/AePS transactions of value less than or equal to Rs. 2000\/-&lt;\/em&gt;, The Gazette of India : Extraordinary, dated January 02, 2018. '><sup>13<\/sup><\/a><\/span>, Meity\u2019s BHIM Referral Bonus Scheme<span id='easy-footnote-14-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-14-3093' title=' Ministry of Electronics and Information Technology Notification: &lt;em&gt;Extension and Modification in the BHIM referral bonus scheme for individuals&lt;\/em&gt;, dated August 14, 2017. &amp;nbsp;'><sup>14<\/sup><\/a><\/span>, BHIM Merchant CashBack scheme<span id='easy-footnote-15-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-15-3093' title=' Ministry of Electronics and Information Technology Notification: &lt;em&gt;Extension and Modification in the BHIM cashback scheme for merchants&lt;\/em&gt;, dated August 14, 2017.'><sup>15<\/sup><\/a><\/span>, state government diesel and petrol subsidies<span id='easy-footnote-16-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-16-3093' title=' Government of Assam Finance Department Notification, FIF.37\/2016\/Part-I\/22, dated December 21, 2016.'><sup>16<\/sup><\/a><\/span>, etc. Alternatives could be a focus on infrastructure- be it a one-time boost to the PIDF\u2019s current corpus of Rs. 345 crore, or to further subsidise PoS terminals and other acceptance infrastructure. Phone related subsidies<span id='easy-footnote-17-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-17-3093' title=' Media Report by S Ronendra Singh: &lt;em&gt;Govt looking at subsidising Android phones to boost digital payments&lt;\/em&gt;, BusinessLine, updated on January 16, 2018.'><sup>17<\/sup><\/a><\/span> can also help towards building digital infrastructure- via increasing the possibility of phone-based payments or even to act as an ePOS.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">While the first line of thought with the earmarked funds is whether it could resolve MDR- the amount of Rs.1500 crore falls short of the required amount<span id='easy-footnote-18-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-18-3093' title=' Newsletter: &lt;em&gt;Edition #213&lt;\/em&gt;, The Ken, dated February 02, 2021.&amp;nbsp;'><sup>18<\/sup><\/a><\/span> (for eg., Rs.2000 crore per year<span id='easy-footnote-19-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-19-3093' title=' Media Report: &lt;em&gt;Zero MDR: FinMin says no to banks\u2019 compensation plea&lt;\/em&gt;, BusinessLine, updated on January 07, 2020.&amp;nbsp;'><sup>19<\/sup><\/a><\/span> was sought in 2019 to compensate for MDR-free infrastructure). Moreover, this is a one-time allocation only, making an MDR refund perhaps unlikely. At present, several places need attention to further digital payments, be it increasing interoperability, increasing reliability of payments infrastructure, addressing fraud and customer grievance redressal, cybersecurity issues, etc. Steps addressing these play a crucial role towards building consumer confidence and increasing payments penetration thereby.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Despite these, from a financial incentive point of view, outside of MDR reimbursements, customer\/ small merchant incentives are perhaps more likely.&nbsp; Whatever the form the incentives take, two hopes are that unlike zero MDR, these benefit both the merchants\/customers and the payments industry equally, and that the benefits target the payments industry as a whole, as opposed to RuPay and UPI alone. This is also given the dependency processing UPI and RuPAY transactions without MDR creates on processing of other forms of payments, in order to absorb the costs incurred.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img data-recalc-dims=\"1\" fetchpriority=\"high\" decoding=\"async\" width=\"770\" height=\"1758\" data-attachment-id=\"3128\" data-permalink=\"https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/types-of-digital-payments-incentives-2x-1\/\" data-orig-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/03\/Types-of-Digital-Payments-Incentives-2x-1.png?fit=1778%2C4060&amp;ssl=1\" data-orig-size=\"1778,4060\" data-comments-opened=\"1\" data-image-meta=\"{&quot;aperture&quot;:&quot;0&quot;,&quot;credit&quot;:&quot;&quot;,&quot;camera&quot;:&quot;&quot;,&quot;caption&quot;:&quot;&quot;,&quot;created_timestamp&quot;:&quot;0&quot;,&quot;copyright&quot;:&quot;&quot;,&quot;focal_length&quot;:&quot;0&quot;,&quot;iso&quot;:&quot;0&quot;,&quot;shutter_speed&quot;:&quot;0&quot;,&quot;title&quot;:&quot;&quot;,&quot;orientation&quot;:&quot;0&quot;}\" data-image-title=\"Types-of-Digital-Payments-Incentives-2x-1\" data-image-description=\"\" data-image-caption=\"\" data-large-file=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/03\/Types-of-Digital-Payments-Incentives-2x-1.png?fit=448%2C1024&amp;ssl=1\" src=\"https:\/\/i0.wp.com\/cashfree.com\/blog\/wp-content\/uploads\/2021\/03\/Types-of-Digital-Payments-Incentives-2x-1.png?resize=770%2C1758&#038;ssl=1\" alt=\"\" class=\"wp-image-3128\" srcset=\"https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/03\/Types-of-Digital-Payments-Incentives-2x-1.png?w=1778&amp;ssl=1 1778w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/03\/Types-of-Digital-Payments-Incentives-2x-1.png?resize=131%2C300&amp;ssl=1 131w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/03\/Types-of-Digital-Payments-Incentives-2x-1.png?resize=448%2C1024&amp;ssl=1 448w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/03\/Types-of-Digital-Payments-Incentives-2x-1.png?resize=768%2C1754&amp;ssl=1 768w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/03\/Types-of-Digital-Payments-Incentives-2x-1.png?resize=673%2C1536&amp;ssl=1 673w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/03\/Types-of-Digital-Payments-Incentives-2x-1.png?resize=897%2C2048&amp;ssl=1 897w, https:\/\/i0.wp.com\/blogrevamp.cashfree.com\/wp-content\/uploads\/2021\/03\/Types-of-Digital-Payments-Incentives-2x-1.png?w=1540&amp;ssl=1 1540w\" sizes=\"(max-width: 770px) 100vw, 770px\" \/><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"GIFT_City_and_possibilities_for_the_payments_industry\"><\/span><strong>GIFT City and possibilities for the payments industry<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">Additional indirect incentives to the payments industry in the current Budget naturally come from incentivizing small businesses (MSME support via reduced\/increased customs duty), encouraging small merchant formalization (One Person Companies, etc.), digitization in general (implementing e-courts), etc. A more specific incentive to look forward to is of course the Fintech Hub at GIFT. Following steps like the establishment of the International Financial Services Centre (\u2018IFSC\u2019) Authority<span id='easy-footnote-20-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-20-3093' title=' International Financial Services Centres Authority Act, 2019.'><sup>20<\/sup><\/a><\/span> last year, comes this year\u2019s additional tax incentives, along with the recent permission to invest in securities from GIFT non-resident entities<span id='easy-footnote-21-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-21-3093' title=' RBI Notification: &lt;em&gt;Remittances to International Financial Services Centres (IFSCs) in India under the Liberalised Remittance Scheme (LRS)&lt;\/em&gt;, RBI\/2020-21\/99, dated February 16, 2021..'><sup>21<\/sup><\/a><\/span> via the Liberalised Remittance Scheme (\u2018LRS\u2019)<span id='easy-footnote-22-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-22-3093' title=' RBI Notification: &lt;em&gt;Master Direction &amp;#8211; Liberalised Remittance Scheme (LRS)&lt;\/em&gt;, RBI\/FED\/2017-18\/3, updated on June 20, 2018.'><sup>22<\/sup><\/a><\/span>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">With its promise for the fintech industry in general, there could be specific benefits to the payments industry as well. The proposed Hub reportedly will aim to support GIFT infrastructure, to \u2018service the technological requirements of financial institutions and banks<span id='easy-footnote-23-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-23-3093' title=' Media Report by Avinash Nair: &lt;em&gt;Explained: What is the status of Gujarat\u2019s GIFT city project?&lt;\/em&gt;, The Indian Express, updated on February 06, 2021.&amp;nbsp;'><sup>23<\/sup><\/a><\/span>\u2019 being set up. The Policy, additionally, might incentivize fintech companies to set up base in GIFT<span id='easy-footnote-24-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-24-3093' title=' Media Report by Kapil Dave: &lt;em&gt;New fintech park proposed by Gujarat for GIFT City&lt;\/em&gt;, The Times of India, updated on January 28, 2021.&amp;nbsp;'><sup>24<\/sup><\/a><\/span> and nearby areas, acting as a facilitator and providing support for skill development, technologies, etc. While not much is known yet, there is potential for the payments industry in terms of providing payments processing facilities, cross-border payment solutions, dynamic currency conversion, payroll facilities, other API based banking services, etc. to companies at GIFT.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">For example, once bank-fintech partnerships are operationalized, one could see neo banking solutions focused on cross-border trade and remittance. In the meanwhile, one step to bring the fintech benefit to GIFT entities more immediately would be to consider allowing fintech participation in facilitating the recently permitted investments in GIFT securities via the LRS. At present, processing such capital account transactions (via the LRS) is restricted to Authorized Dealer<span id='easy-footnote-25-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-25-3093' title=' RBI Notification: &lt;em&gt;Master Direction &amp;#8211; Liberalised Remittance Scheme (LRS)&lt;\/em&gt;, RBI\/FED\/2017-18\/3, updated on June 20, 2018.'><sup>25<\/sup><\/a><\/span> banks alone, and non-bank entities like aggregators cannot participate<span id='easy-footnote-26-3093' class='easy-footnote-margin-adjust'><\/span><span class='easy-footnote'><a href='https:\/\/blogrevamp.cashfree.com\/union-budget-2021s-gift-to-the-payments-industry-and-overcoming-zero-mdr-issues\/#easy-footnote-bottom-26-3093' title=' RBI Notification: &lt;em&gt;Master Direction &amp;#8211; Miscellaneous&lt;\/em&gt;, RBI\/FED\/2017-18\/14, updated on January 04, 2016.'><sup>26<\/sup><\/a><\/span>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Thus, the Budget has brought at least two good steps for the payments industry to look forward to.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This article explores the form digital payments incentives via the Rs.1500 cr. fund can take &#038; avenues that can open via GIFT City.<\/p>\n","protected":false},"author":11,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"_themeisle_gutenberg_block_has_review":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_wpcom_ai_launchpad_first_post":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[1,1412],"tags":[2107,2190],"class_list":["post-3093","post","type-post","status-publish","format-standard","category-all","category-policy","tag-experts-speak","tag-payment-policies"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.3 - 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