Fintech Companies - MUST READ

Happy Weekend everyone!

Today I am back with another weekly update for the Fintech Companies.

Covering updates in the regulatory or economic side of the Fintech market for Indian companies.

If you run a Fintech Company in India.

Or you plan on expanding your Fintech Company in India.

Then this becomes important for you.

Here are the main things that happened in the last week.

A) Emerging Trends

1) Flipkart Invests $30M in Supermoney

Investment Details:

• Flipkart, backed by Walmart, invested $30M in its fintech arm Supermoney, following a $20M infusion last year, per Bloomberg.

• Supermoney aims to expand lending and stock broking, led by CEO Prakash Sikaria, per the article.  

Growth Metrics:

• Handles 257M UPI transactions monthly, ranking fifth in India, per NPCI data.

• Disbursed $700M via lending partners, targeting profitability by year-end, per sources.  

Why It’s Notable:

• Bolsters Flipkart’s fintech push with credit and wealth products.

• Prepares Supermoney for external funding and IPO potential.  

2) NPCI Plans EMI Payments on UPI

Credit Innovation:

• NPCI is developing EMI conversion for UPI payments, enabling fintechs like Navi and Paytm to offer credit features, per Economic Times.

• Mimics card-based EMI at POS, following RuPay credit cards and UPI credit lines, per Rajiv Naresh.  

Market Impact:

• UPI processes 20B transactions monthly, with a 1.5% interchange fee on credit lines, per industry sources.

• Aims to replicate BNPL for small-value credit, with cautious bank adoption, per the article.  

Why It’s Notable:

• Expands UPI into a full credit ecosystem.

• Enhances revenue potential for fintechs via credit transactions.  

3) Bonto Shuts Down After Three Years

Closure Details:

• Kenyan fintech Bonto ceased operations on August 15, 2025, due to low remittance fees and high compliance costs, per Kahawa Tungu.

• CBK revoked its license on September 11, 2025, per Kamau Thugge’s notice.  

Challenges Faced:

• Explored selling its license but found deals unviable due to CBK timelines and losses, per founder Copreaux.

• Impacts Kenya’s fintech sector, per the article.  

Why It’s Notable:

• Highlights regulatory and cost challenges for fintechs.

• Signals caution for remittance-focused startups.  

4) RBI Halts Simpl’s Payment Operations

Regulatory Action:

• RBI ordered Simpl to suspend payment operations due to FEMA violations worth ₹913.75 Cr, per Moneycontrol.

• ED filed a case in July 2025 for diverting FDI to financial services without approval, per the article.  

Company Context:

• Simpl, a BNPL platform with 26,000+ merchants, faced layoffs and cash burn issues in 2024, per the report.

• Raised $40M in 2021, led by Valar Ventures, per the article.  

Why It’s Notable:

• Underscores RBI’s strict oversight of fintech compliance.

• Impacts Simpl’s operations and BNPL market dynamics.  

B) Economic Highlights

1) RBI Cancels Datta Finance’s NBFC License

License Revocation:

• RBI canceled Datta Finance and Trading’s NBFC license for irregular digital lending via KinCash and ZestCash apps, per Moneylife.

• Violated outsourcing rules by delegating KYC, loan disbursement, and recovery, per RBI.  

Regulatory Impact:

• Action under RBI Act 1934 bars Datta from NBFC activities, per the article.

• Reflects RBI’s focus on transparency and consumer protection, per the report.  

Why It’s Important:

• Cracks down on non-compliant digital lending practices.

• Enhances accountability in the NBFC sector.  

2) India Considers Raising PSU Bank FDI Limit

Proposed Reform:

• India plans to increase the 20% FDI limit in PSU banks while maintaining 51% government stake, per Economic Times.

• Aims to boost capital and global competitiveness, per M Nagaraju.  

Financial Context:

• PSU banks’ gross NPAs dropped to 2.58% by March 2025 from 9.11% in 2021, per CareEdge Ratings.

• Government may use golden share mechanism to retain control, per a senior executive.  

Why It’s Important:

• Strengthens PSU banks’ balance sheets for growth.

• Aligns with India’s economic reform agenda.  

C) Business Developments

1) CAMS Evolves into Fintech Powerhouse

Company Transformation:

• Chennai-based CAMS, a registrar and transfer agent, has become a fintech leader in payments, mutual funds, and insurance, per DTNext.

• Secured Sri Lanka mandate and GIFT City presence, per Vasanth Jeyapaul, CEO of CAMSPay.  

Key Achievements:

• Manages ₹50T in mutual fund assets, partnered with Jio BlackRock for ₹17.8B fund offer, per the article.

• Launched cloud-native payment gateway (5,000 TPS) and QR-based SIPs via UPI, per Jeyapaul.  

Insurance and Analytics:

• Pilots Bima Central to boost insurance penetration and tests UPI-based credit analytics, per the report.

• Focuses on account aggregation and blockchain pilots, per the article.  

Why It’s Notable:

• Shifts from back-office to modern fintech backbone.

• Targets low-penetration markets with innovative solutions.  

2) RBI Halts Credit Card Rent Payments

Regulatory Change:

• RBI’s circular bans fintechs like PhonePe, Paytm, and Cred from processing credit card rent payments due to incomplete landlord KYC, per InformalNewz.

• Users must switch to netbanking, UPI, NEFT, or cheques, per the article.  

Industry Impact:

• Ends reward points and cashback on rent payments, impacting fintech revenue, per the report.

• Follows 2024 bank restrictions, like HDFC’s 1% fee and ICICI/SBI’s reward cuts, per the article.  

Why It’s Notable:

• Enhances payment system transparency and security.

• Forces fintechs to adapt to traditional payment methods.  

D) Regulatory Insights

1) RBI Fines Muthoot FinCorp ₹2.7L

Penalty Details:

• RBI imposed a ₹2.7L fine on Muthoot FinCorp on September 24, 2025, for non-compliance with Internal Ombudsman rules, per RBI website.

• Failed to auto-escalate rejected complaints to the ombudsman, per March 31, 2024, inspection.  

Context:

• Penalty under RBI Act 1934 targets compliance gaps, not customer transactions, per the article.

• Imposed after review of Muthoot’s submissions, per RBI.  

Why It’s Important:

• Enforces robust grievance redressal mechanisms.

• Strengthens NBFC regulatory compliance.  

2) RBI Penalizes Makarpura Co-op Bank ₹2L

Monetary Fine:

• RBI fined Makarpura Industrial Estate Co-op Bank ₹2L on September 22, 2025, for KYC and cybersecurity violations, per RBI website.

• Failed to review account risk categorization every six months and implement cybersecurity measures, per March 31, 2024, inspection.  

Regulatory Action:

• Penalty under Banking Regulation Act addresses deficiencies, not customer agreements, per the article.

• Follows notice and hearings, per RBI.  

Why It’s Important:

• Reinforces KYC and cybersecurity standards.

• Enhances co-operative bank accountability.  

3) RBI Issues 2025 Authentication Directions

New Guidelines:

• RBI’s 2025 Authentication Mechanisms Directions mandate two-factor authentication (2FA) for digital payments, effective April 1, 2026, per RBI website.

• Allows alternative methods beyond SMS OTPs, ensuring robust and interoperable systems, per the guidelines.  

Key Provisions:

• Requires dynamic authentication for non-card-present transactions and risk-based checks, per the article.

• Card issuers must validate cross-border transactions by October 1, 2026, and comply with DPDP Act, per the directions.  

Why It’s Important:

• Strengthens digital payment security and reliability.

• Aligns with global cross-border transaction standards.  

I hope this was useful to you guys working in the Fintech Space.

The fintech space is everchanging, so staying up to date with information will help you make smart decisions for your business.

Again, If I see any notable changes or updates on the Fintech Side during the week, that can help Fintech Companies, I will compile them.

And then share them on the weekends!

Btw - I run a legal firm that's a one-stop solution for Fintech Companies in India.

Whether you are starting out in India, or expanding to the Indian market, DM 💬 me if you need legal help with:

1) Business Registration

2) Contract Drafting or Review

3) Compliance

4) Answering any legal questions

See you tomorrow with another Newsletter now.