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) Bain Capital Receives RBI Nod for Major Stake in Manappuram Finance

Approval Milestone:

• RBI granted final approval (February 13, 2026) for Bain Capital affiliates to acquire up to 41.66% of Manappuram Finance’s equity / convertible instruments.

• Investment involves ~₹4,385 crore for an 18% stake via preferential allotment and warrants at ₹236 per share.  

Transaction Structure:

• Triggers mandatory open offer for additional 26% from public shareholders at same price.

• Post-transaction, Bain Capital becomes joint promoter with board reconstitution including its nominees.  

Strategic Impact:

• Stake could reach 18–41.7% fully diluted depending on open offer subscription.

• Existing promoters retain ~28.9%; aims to accelerate branch expansion, tech, and risk management.  

2) Roopya Secures ₹4 Crore Seed Funding for No-Code Lending Platform

Funding Round:

• Fintech SaaS startup Roopya raised ₹4 crore in seed round led by Inflection Point Ventures.

• Funds to scale its AI-powered, no-code “Lending-as-a-Service” platform.  

Platform Highlights:

• Enables lenders to launch custom loan products (BNPL, EMI) in 4–6 days; fully automated LOS compliant with RBI norms.

• Processes loans worth >₹100 crore this fiscal, supports 1,100+ POS terminals across 10 states.  

Market & Impact:

• Works with 20+ lenders processing 30,000+ loans monthly; reduces costs by up to 30%, defaults by 25%, processing time by >50%.

• Targets 2,500+ NBFCs and LSPs in fast-growing digital lending market (projected >₹3.6 lakh crore by 2030).  

B) Economic Highlights

1) Digital Lenders See Noticeable Drop in Borrowing Costs

Cost Reduction Trend:

• New-age fintech lenders report 50+ bps decline in cost of funds over the past year (e.g., Five-Star Business Finance from 9.63% to 9.12%).

• Large rated fintechs seeing similar 50 bps improvement in last three quarters.  

Drivers & Benefits:

• Growing scale, profitability, and recent large fundraises (Fibe $40M, Flexiloans $80M) build lender confidence.

• Lower borrowing costs improve yields and enable potential reduction in customer interest rates.  

Industry Outlook:

• Banks now funding 30%+ of some players’ books (target 50%); unsecured lending volumes showing early recovery signs.

• Upcoming IPOs (Aye Finance, Kissht) and credit rating upgrades expected to further ease capital access.  

2) Reliance Jio CTO: AI Integration Will Elevate India’s Digital Public Infrastructure

Vision for DPI + AI:

• Shyam Mardikar (Reliance Jio Group CTO – Mobility) says layering AI on top of UPI, Aadhaar, banking, and ERP will transform inclusive governance.

• Aims to make services intuitive and accessible even in remote villages.  

Key Enablers:

• Widespread 4G/5G connectivity + shift to efficient GPUs/compute clusters (benefiting Nvidia, AMD).

• Enables intelligent automation in vehicles, devices, supply chains, and personalized enterprise workflows.  

Future Outlook:

• Human-AI harmony across citizens, government, and corporates; 5G-Advanced & 6G will support distributed AI compute.

• DoT official Syed Tausif Abbas stresses interdependence of generative AI and future networks for security and trust.  

3) PCI SSC Strengthens Focus on India’s Digital Payment Security

Regional Expansion:

• PCI Security Standards Council launches India-South Asia Regional Engagement Board (REB).

• Board includes NPCI, HDFC Bank, Google; provides direct input on regional fraud trends and risks.  

Initiatives:

• Tailors global payment security standards to local needs amid surging transaction volumes.

• Introduces AI guidance and expanded training on mobile & e-commerce security.  

Strategic Goal:

• Enhances collaboration to protect increasingly complex digital payment environments in India and South Asia.  

4) PhonePe Merchant Network Crosses Major Milestones

Scale Snapshot:

• 47.19 million registered merchants; processed 24.96 billion merchant transactions worth ₹8.51 trillion (six months to Sep 2026).

• Daily Active Merchants now 60.77% of Monthly Active Merchants (up from 44.18% in Mar 2023).  

Engagement Growth:

• Transactions per Monthly Active Merchant doubled to 379.16 from 147.87.

• Key products: multi-language Smartspeaker (audio confirmations), EDC machines supporting UPI & RuPay Credit, integrated POS & Payment Gateway.  

Role in Ecosystem:

• Positions PhonePe as core infrastructure for merchants across retail, high-traffic, and diverse sectors.  

5) JMJ Fintech Calls Postal Ballot for ₹10 Cr Related-Party Loan

Transaction Proposal:

• Postal ballot to approve ₹10 crore secured loan to related party JMJ Finance Limited (NBFC).

• Tenure spans FY25-26 and FY26-27; represents 58.32% of FY24-25 turnover.  

Governance & Compliance:

• Approved by Audit Committee; arm’s length pricing, ordinary course of business.

• Remote e-voting only; notice dispatched February 11, 2026.  

Context:

• Follows previous ₹2 crore loan in FY24-25; no defaults in last three years.

• Strategic deployment to generate interest income and support lending portfolio growth.  

C) Business Developments

1) CII Session Highlights AI’s Role in Revolutionizing Fintech

Key Insights:

• AI is driving efficiency, intelligent automation, and deeper penetration into underserved markets, accelerating India’s fintech transformation.

• Discussed at CII’s “AI in Fintech: Transforming the Sector with Intelligence and Automation” session during India AI Impact Summit 2026 (Feb 16, New Delhi).  

Notable Contributions:

• UIDAI’s Vivek Chandra Verma: Aadhaar handles 9 crore daily authentications; AI strengthens fraud detection, enrolment, and future-proofing.

• Hero FinCorp, InSolutions Global, True Balance, PolicyBazaar, and Mastercard leaders emphasized AI for risk assessment, KYC/UPI innovations, underserved access, customer-centric scaling, and risk mitigation.  

Broader Discussion:

• Addressed AI concentration risks, supply chain dependencies, and the need for balanced regulation + innovation governance.

• Focus on building responsible, inclusive financial ecosystems on India’s digital foundation.  

2) Mauritius Positions Fintech as Core Pillar in Ties with India

Ministerial Statement:

• Mauritius Financial Services Minister Jyoti Jeetun highlighted fintech as central to deepening India-Mauritius economic partnership.

• UNECA-backed National FinTech Strategy to launch soon, aiming to make Mauritius a leading African digital finance hub.  

Collaboration Highlights:

• Growing opportunities for Indian fintechs to expand into Africa via Mauritius; many Indian firms already relocating there.

• Mauritius Telecom integrated UPI into MyT Money app, showing cross-border payment interoperability.  

Economic Context:

• Mauritius remains one of India’s largest FDI sources over 30 years due to its mature financial centre.

• Full FATF compliance (all 40 recommendations), zero-tolerance policy, and plans for deeper SEBI-FSC coordination.

• Broader ties include renewable energy, electric buses, maritime security, and blue economy cooperation.  

D) Regulatory Insights

1) RBI Proposes New Reporting Rules for INR OTC Forex Derivatives

Draft Framework:

• AD Category-I banks must report all OTC foreign exchange derivatives involving INR (entered globally by their offshore-related parties) to CCIL’s Trade Repository.

• Covers derivatives not traded on exchanges, including those on electronic trading platforms (ETPs).  

Reporting Expectations:

• Full details required: transaction structure, counterparty, pricing, settlement, and risk exposure.

• Central counterparties (CCPs) can be reported only for anonymous, cleared trades.  

Objective & Process:

• Aims to boost transparency, monitor offshore exposures, and improve risk assessment in global INR-linked markets.

• Reporting formats to be specified by CCIL (with RBI approval).  

2) Draft Directions Issued on Foreign Exchange Dealings by Authorised Persons

Permitted Activities:

• ADs can undertake FX transactions with other ADs, overseas branches, IBUs, or OBUs for hedging, balance sheet management, market making, and proprietary positions.  

Non-Deliverable INR Derivatives (NDDCs):

• Allowed with other ADs and overseas entities/IBUs/OBUs (directly or back-to-back).

• Conditions: AD Cat-I bank (or parent) must have an operating IBU; subsidiaries/JVs must be banking entities; cash settlement in INR or foreign currency permitted.  

Additional Coverage:

• Includes exchange-traded transactions, gold price hedging, foreign currency accounts, overseas investments, governance, risk management, and market timings.  

3) RBI Mandates Unique Transaction Identifier (UTI) for OTC Derivatives

Framework Overview:

• Mandatory generation and reporting of UTI for all OTC derivative transactions reportable to trade repositories.

• Aligns with global CPMI-IOSCO technical standards for consistent, lifecycle-unique identification.  

Key Mechanisms:

• Waterfall responsibility hierarchy for UTI generation to prevent duplication.

• Covers lifecycle events: amendments, novations, terminations; includes reporting timelines and reconciliation.  

Implementation:

• Applies to all OTC derivatives under specified RBI directions.

• Effective from January 1, 2027 – entities must prepare systems accordingly.  

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.