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) Niyo acquires Kanji Forex; appoints Amit Talwar as CEO

• Niyo acquired legacy forex company Kanji Forex to enter the foreign exchange business.

• New entity: Niyo Forex, led by Amit Talwar (ex-IndusInd Bank, 27+ years in banking).

• Plans: expand branches, offer forex cards, outward remittances, and partner with corporates.

• Niyo has raised $179M from Accel, Lightrock, Beams Fintech, etc.

• Kanji Forex, founded in 1935, brings long-standing credibility.

2) NPCI to shut down UPI Collect Request (P2P Pull Transactions) from Oct 1

• NPCI ending recipient-initiated UPI payments (‘pull’ transactions) due to rising fraud.

• Pull = recipient requests, sender approves with UPI PIN.

• Scammers misuse by sending disguised requests.

• Already capped at ₹2,000 since 2019, but still exploited.

• Accounts for only ~3% of UPI activity, making phase-out easier.

3) Paytm secures RBI nod to operate as Online Payment Aggregator

• RBI grants Paytm “in-principle” approval after 2 years of hurdles.

• Scope: only online merchant payment services, not offline.

• Must pass system audit & cybersecurity review within 6 months.

• Background: earlier rejection due to Ant Group links; Ant has now exited.

• Financials:

• Q1 FY26 Net Income: ₹1.23B (~$14M) (vs. loss last year).

• Revenue up 28% YoY to $224M.

• Contribution margin: 60% (vs. 50%).

• Shares up 13.25% YTD, closing at ₹1,118.50 ($13) pre-approval.

• Positions Paytm stronger against PhonePe & Google Pay.

4) AU Small Finance Bank gets RBI nod to become Universal Bank

• RBI gave in-principle approval for AUSFB to become a Universal Bank.

• SFB licence: 2015, operations began 2017.

• Network: 2,505 touchpoints, 1.15 crore customers, 53,000 employees.

• Financials (June 2025):

• Shareholders’ funds: ₹17,800 crore.

• Deposits: ₹1,27,696 crore.

• Loans: ₹1,17,624 crore.

• Balance sheet: ₹1.60 lakh crore.

• Q1 FY26: Net profit ₹581 crore (16% YoY rise), NIM fell to 5.4%.

B) Economic Highlights

1) Consumer loan growth bottomed out; recovery expected - Morgan Stanley

• Consumer loan growth slowed: 31% (Q1 FY23) → 8% (Q4 FY25).

• Causes: RBI higher risk weights, rising delinquencies, risk perception.

• Early delinquencies (PAR 31-90 days):

• Public banks: 2.61% (vs 2.45%).

• NBFCs: 2.19% (vs 2.01%).

• Private banks: 1.11% (vs 1.26%).

• Outlook: gradual recovery expected with credit cost moderation, but vigilance on asset quality needed.

2) RBI’s revised co-lending norms to boost NBFC growth - Crisil

• Co-lending extended to all regulated entities and all loans.

• Key changes:

• Loan retention cut from 20% → 10%.

• Allows Direct Lending Guarantees (DLG) up to 5% across loan types.

• Requires uniform asset classification across partners.

• Co-lending AUM already ₹1.1 trillion (March 2025).

• Effective from Jan 1, 2026 (or earlier if adopted).

3) Banks propose raising GST slab for merchants to ₹1 crore turnover

• DFS reviewing GST registration thresholds with banks, RBI, NPCI.

• Current: Goods ₹40 lakh, Services ₹20 lakh.

• Proposal: raise to ₹1 crore turnover for merchants.

• Aim: reduce compliance, boost digital payments.

• Linked to plan for MDR on UPI only above ₹1 crore turnover.

• Trigger: Karnataka tax notices pushed traders back to cash payments.

4) Gujarat to set up dedicated Cyber Crime Unit

• New cyber unit in Gandhinagar, operational by March 2026.

• Since 2020-21: 23,784 cyber fraud cases (~13 per day).

• 2023 helpline: 1,21,701 calls (1 every 4 minutes).

• Gujarat lost ₹17 crore in 5 years; only 19% recovered.

• Features: strike teams, expert forensic manpower, training, PPP audits.

• July 2025: India’s largest digital arrest scam – doctor lost ₹19.24 crore.

C) Business Developments

1) IIM Bangalore launches FinTech Certificate Programme for Young Professionals

• IIM Bangalore (IIMBx) launched an online FinTech Certificate Programme for students and early-career professionals.

• Supported under Karnataka’s FinTech Centre of Excellence (CoE), backed by the Department of Electronics, IT, and Bt.

• Two-tier structure: 6-month Foundation Certificate + 3-month Advanced Certificate.

• Subsidized fees through a government grant for wider access.

• Strong focus on flexible learning and women re-entering the workforce.

• Programme designed with input from both academicians and industry leaders.

• Will also connect with startup incubation at NSRCEL, IIM Bangalore’s entrepreneurship centre.

• Led by Prof. G. Sabarinathan, ex-Professor of Finance & Accounting at IIMB.

2) Fintech news platform The Head and Tale launched

• Founded by veteran journalist Arti Singh, ex-deputy editor at Mint, with 17+ years of business reporting experience.

• Independent digital platform focusing on fintech and emerging tech.

• Offers investigation-first journalism with 3-4 deep-dive reports per month.

• Built early traction with paying subscribers seeking independent reporting.

• Broke stories on startup conflicts, regulatory issues, and under-reported developments in year one.

• Now expanding into AI and other emerging tech sectors.

• Mission: clarity over noise, nuance over headline-chasing.

3) Bank of Baroda expands bob इ Pay app with global UPI features

• App now offers 3 new international services:

• UPI Global Acceptance: QR-based international merchant payments (available in 8 countries).

• Foreign Inward Remittance: 24×7 real-time transfers from Singapore residents to India.

• UPI for NRIs: NRE/NRO account linking for seamless India payments.

• Transactions show dual currency values, exchange rates, and fees for transparency.

• Daily and per transaction limit: ₹1,00,000 (same as domestic).

• User base: 1.3 million customers in a short time.

• Available for both Bank of Baroda customers and non-customers.

D) Regulatory Insights

1) RBI’s FREE-AI framework for responsible AI in financial services

• RBI released the Framework for Responsible and Ethical Enablement of AI (FREE-AI) on Aug 13, 2025.

• Aims: safe, fair, transparent, inclusive AI adoption in finance.

• Structure: 7 principles (‘sutras’), 26 recommendations under 6 pillars - Governance, Data, Fairness, Transparency, Accountability, Risk Management.

• Introduces graded liability: protects early innovators if acting responsibly.

• Expected benefits: AI sandboxes, sectoral datasets, indigenous models to lower costs and risks.

• Potential outcomes: new AI-driven products, inclusion-focused models, pay-per-use compliance tools.

• Industry feedback positive but highlights challenges: limited financial literacy, weak digital infrastructure, biased data.

• RBI’s long-term vision: position India as a global leader in ethical fintech.

2) RBI penalty on Shree Bharat Co-operative Bank Ltd. (Vadodara, Gujarat)

• Penalty: ₹2.5 lakh.

• Reasons:

• No system for internal audit.

• Failure to identify and classify NPAs on an ongoing basis.

• Did not conduct periodic reviews of risk categorisation.

• Penalty imposed under Banking Regulation Act, 1949.

• Action relates to compliance deficiencies, not transaction validity.

3) RBI penalty on Sardargunj Mercantile Co-operative Bank Ltd. (Patan, Gujarat)

• Penalty: ₹1 lakh.

• Reason: accepted interest-free deposits in non-current accounts, violating RBI’s deposit interest rules.

• Imposed under Banking Regulation Act, 1949.

• Action is compliance-related, not about transaction validity.

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.