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) MobiKwik Shares Surge Over 17% After RBI Grants NBFC Licence

Stock Reaction:

• One MobiKwik Systems share price jumped more than 17% intraday on April 27, reaching a high of ₹237.77 after the company announced RBI approval for its NBFC licence.

• Shares were trading around 15.86% higher at ₹234.26 during the session.  

Strategic Plans:

• The company will foray into digital lending through its wholly-owned subsidiary MobiKwik Financial Services Private Limited.

• Plans to offer both secured and unsecured credit products, with a core focus on Tier 2 and Tier 3 cities and underserved areas across India.  

Growth Vision:

• Aims to leverage its 186 million+ customer base, tech infrastructure, risk underwriting, and collection capabilities to design innovative credit products.

• Operations will begin after receiving the Certificate of Registration from RBI.

• Upasana Taku, Executive Director, Co-founder & CFO, called the NBFC approval a pivotal step toward building a scaled financial services platform with strong governance and risk discipline.  

Market Context:

• Despite a 9% decline over the past year, the stock has gained 41% in the past month and 3% in 2026 so far. Market capitalisation stood at ₹1,857 crore during the session.  

2) Indian Fintech Funding Remains Steady at $513 Million in Q1 2026 Amid Fewer Deals

Funding Snapshot:

• Fintech investments in India stayed nearly flat at $513 million in Q1 2026 (marginal 2% increase from $503 million in Q1 2025), according to Tracxn’s India FinTech Q1 2026 report.

• Deal volume halved, dropping 54% year-on-year to just 45 rounds from 99.  

Key Trends:

• Average cheque sizes more than doubled, showing investor preference for larger bets on fewer, later-stage companies with proven unit economics.

• Mumbai overtook Bengaluru as the top investment hub, capturing 61% of total funding ($311 million), up sharply from 9% a year ago. Bengaluru’s share fell to 30%.  

Major Deals & Patterns:

• Mumbai-based housing finance platform Weaver raised $156 million, accounting for nearly one-third of quarterly funding.

• Late-stage funding surged 126% to $273 million, while seed-stage funding collapsed 65% to $25.7 million — creating a “barbell” pattern.

• No new unicorns or IPOs; two acquisitions occurred (Polymarket bought Brahma, Rainmatter acquired PensionBox).  

B) Economic Highlights

1) Flipkart, Axis Bank & PayU Launch Biometric Authentication for Card Payments

New Feature Rollout:

• Flipkart, in partnership with Axis Bank and PayU, has introduced biometric authentication (fingerprint or Face ID) for card payments on Android and iOS devices.

• Eliminates the need for OTP; initially enabled for Axis Bank cardholders via issuer-level verification.  

Security & Convenience:

• Backed by device fingerprinting and enhanced checks to reduce risks like SIM-swap and OTP fraud.

• PayU handles merchant-side infrastructure and authentication flows; Axis Bank uses Wibmo (a PayU company) for issuer-side verification.  

Context & Impact:

• Addresses rising digital payment fraud (exceeding ₹1,400 crore in FY24) and aligns with RBI’s push for biometric and risk-based authentication over SMS OTPs.

• Expected to improve transaction success rates while enhancing security and user experience.  

Stakeholder Comments:

• Gaurav Arora (Flipkart) emphasised building safety into payments amid sophisticated fraud risks.

• Arnika Dixit (Axis Bank) highlighted delivering effortless yet secure digital payments.  

2) Peak XV Exits MobiKwik with ₹130 Crore Block Deal as Company Prepares NBFC Lending Shift

Exit Details:

• Peak XV Partners sold its remaining 7.7% stake in One MobiKwik Systems through a ₹130 crore block deal on April 28.

• Sold approximately 6.08 million shares at an average price of ₹214 per share to buyers including Florintree, Dymon Asia Capital, and Karma Capital.  

Strategic Timing:

• Exit follows MobiKwik receiving its NBFC licence from RBI, enabling the company to lend directly on its own books.

• Founder Bipin Preet Singh noted this will boost margins, operational efficiency, and allow development of unique credit products.  

Company Performance:

• Reported a consolidated net profit of ₹4 crore in Q3 FY26 (vs loss of ₹55.3 crore YoY).

• Stock surged over 18.5% to around ₹240 intraday despite the block deal discount.  

Sector Context:

• Reflects the broader shift of fintechs toward balance sheet lending to improve margins, reduce bank dependence, and leverage AI-led underwriting and account aggregator frameworks.

• Digital lending market in India is projected to reach $350 billion by 2026.  

C) Business Developments

1) Smaller UPI Players to Push for Fresh Curbs on Market Leaders at NPCI Meeting

Industry Meeting:

• Smaller third-party UPI players including Amazon Pay, Cred, Super Money, and Navi are set to demand new restrictions on dominant players at a meeting with NPCI on Thursday.

• The push focuses on limiting further expansion by PhonePe, Google Pay, and Paytm, which collectively hold over 85% market share.  

Key Demands:

• Restrictions on user acquisition tactics like soliciting UPI ID mappers and targeting contacts for app downloads.

• Tighter monetisation rules, including bans on charging for tokenised UPI checkouts, curbs on “collect” requests, and limits on autopay mandates to prevent concentration.

• Preferential incentives, interoperability of transaction history and biller data, and early access to new UPI features.  

Background:

• The long-pending 30% market share cap (announced in 2020) has been deferred to end-2026.

• Smaller TPAPs argue that current concentration risks the payment network’s stability as UPI crosses 22 billion monthly transactions.  

2) Paytring Builds Payments Orchestration Platform to Reduce Failures and Checkout Friction

Platform Focus:

• Founded in 2023 by Debal Chakraborty, Paytring acts as a payments orchestration layer that intelligently routes transactions across multiple PSPs to improve success rates.

• If a UPI or card transaction fails, the system analyses the reason and reroutes to a more suitable provider.  

Performance Impact:

• Reduces payment failures during peak periods from 20-25% to 7-8%.

• Helps merchants recover revenue and reduce abandoned checkouts, especially in high-volume sectors like NBFCs, travel & hospitality, and D2C brands.  

AI Integration:

• Leverages OpenAI tools for development, merchant onboarding, and operations (25-30% of daily work).

• Focuses on intelligent routing and real-time adaptation rather than traditional single-gateway models.  

Vision:

• Aims to become the invisible infrastructure ensuring transactions succeed, addressing a key pain point in digital commerce as businesses expand payment methods.  

D) Regulatory Insights

1) RBI Issues Final Amendment Directions on NBFC Registration Exemptions

Key Proposal:

• Final ‘Reserve Bank of India (Non-Banking Financial Companies – Registration, Exemptions and Framework for Scale Based Regulation) Amendment Directions, 2026’ issued after reviewing stakeholder feedback on the February 2026 draft.  

Main Changes:

• Exemption from registration for ‘NBFCs not availing public funds and not having customer interface’ (including Type I NBFCs) with asset size below ₹1,000 crore, subject to conditions.

• Procedure outlined for deregistration or conversion of existing such NBFCs.  

Purpose:

• Streamlines regulatory framework while maintaining oversight on entities with public funds or customer interface.  

2) RBI Releases Final Amendment Directions on Revised Lending Norms for Urban Co-operative Banks

Final Directions:

• Issued after incorporating stakeholder feedback on the February 2026 draft.

• Covers amendments to concentration risk management, credit facilities, and financial statement disclosures for UCBs.  

Key Proposals:

• Rationalisation of unsecured advances definition, enhancement of single/aggregate unsecured limits, higher lending limits for consumer durables to nominal members, and greater discretion for Tier 3 & 4 UCBs on housing loans.

• Additional disclosure requirements introduced.  

Objective:

• To strengthen lending practices and risk management in the UCB sector.  

3) RBI Launches Mission SAKSHAM for Capacity Building of Urban Co-operative Banks

Initiative Launch:

• Mission SAKSHAM (SAHKARI BANK KSHAMTA NIRMAN) — a mission-mode, sector-wide training programme for UCBs.

• Aims to train about 1.40 lakh participants including board members, senior management, risk/compliance/audit heads, and IT staff.  

Scope:

• Includes in-person and e-learning courses, with efforts for regional language delivery.

• Designed in consultation with the UCB Umbrella Organisation and National/State Cooperative Federations.  

Expected Outcomes:

• Enhanced managerial capabilities, better compliance culture, and stronger institutional resilience across the UCB sector.  

4) RBI Issues Directions on Reporting Instructions for Authorised Dealer Category-I Banks

Reporting Framework:

• Final directions require AD Category-I banks to report foreign exchange derivative transactions involving INR undertaken globally by their related parties to CCIL’s Trade Repository.

• Aims to enhance transparency in the foreign exchange market and strengthen monitoring of offshore exposures.  

Implementation:

• Feedback on the February 2026 draft incorporated; operational aspects shared with CCIL.  

5) RBI Imposes ₹3.30 Lakh Penalty on Janakalyan Sahakari Bank

Penalty Details:

• Imposed on April 24, 2026, for non-compliance with Exposure Ceiling to Group Borrowers directions.  

Violation Sustained:

• Breached prudential exposure limits prescribed for group borrowers in certain instances.  

Context:

• Based on statutory inspection as on March 31, 2025.

• Penalty reflects regulatory deficiencies and is without prejudice to further actions.  

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.