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) True Balance Raises $10 Million Debt to Scale Underbanked Lending

Funding Details:

• Digital financial services platform True Balance secured $10 million in debt funding led by Northern Arc Capital.

• Proceeds directed to True Credits Pvt Ltd (its NBFC arm) to expand lending capacity and operations.  

Target Focus:

• Aims to deepen credit access for underprivileged borrowers with limited or no formal credit history — a segment often excluded by traditional banks due to perceived risk.

• Emphasizes small-ticket personal loans delivered via mobile-first, low-documentation model.  

Platform Reach & Growth:

• Already disbursed >$30 million in loans this financial year; leverages alternative data and digital tech for credit assessment.

• Operates as a multi-service app (mobile recharges, utility payments, digital wallet) under Balancehero India (South Korea-based parent).  

2) Fintechs Claimed 81% of RBI’s ₹1,417 Cr PIDF Incentives

Scheme Performance:

• Payments Infrastructure Development Fund (PIDF) disbursed ₹1,417 crore (2021–2025) to expand digital payment acceptance in tier-2/3 cities and underserved areas.

• Disbursements grew ~3.5× from ₹154 crore (2021) to ₹534 crore (2024); scheme closed Dec 31, 2025 with ₹329 crore surplus.  

Entity Split:

• Fintechs received ~₹1,149 crore (81%); banks took ~₹268 crore (19%).

• Top recipients: PhonePe (₹507 crore), Paytm (₹352 crore), SBI (₹83 crore), Pine Labs (₹82 crore), BharatPe (₹74 crore).  

Implications:

• Highlights fintechs’ speed in last-mile merchant onboarding (QR codes, soundboxes) vs. slower bank deployments.

• Validates incentive-driven push for digital infrastructure; long-term success depends on sustained merchant usage post-subsidies.  

3) RBI Authorises CRED as Full-Fledged Payment Aggregator

Licence Grant:

• RBI issued final authorisation to Dreamplug Paytech Solutions Pvt Ltd (CRED’s entity) to operate as a payment aggregator.

• Enables direct merchant onboarding, multi-instrument payment collection, settlement, and refund management.  

Expanded Capabilities:

• Shifts CRED from partner-dependent flows to its own regulated payment stack; complements existing PPI, IRDAI corporate agency, SEBI RIA, and NPCI TPAP licences.

• Processed >₹8.5 lakh crore in FY24–25 for 1.5 crore users; handles over one-third of India’s credit card bill payments.  

Compliance Posture:

• Undergoes 100+ annual external audits; holds ISO 27001 (security) and ISO 27701 (privacy) certifications.

• Aligns with RBI’s tightened oversight of payment intermediaries handling large customer fund volumes.  

B) Economic Highlights

1) RBI Deputy Governor Flags Risks in Rapid Digital Lending Growth

Cautionary Note:

• Swaminathan J, RBI Deputy Governor, warned that speed and convenience of digital lending must be matched with responsible underwriting to avoid over-indebtedness and borrower distress.  

Key Concerns:

• Digitalisation expands reach but increases vulnerabilities if credit decisions lack care.

• Emphasised transparent pricing, explainable decisions, respectful collections, strong redress, and fairness in models.  

Broader Priorities:

• Called for collaboration across regulators, fintechs, banks, researchers, and civil society to scale beneficial inclusion while ensuring resilience and sustainability.

• Highlighted persistent gender gap in digital finance — requires capability building, privacy, and safety beyond device/connectivity access.  

2) PayU + GoKwik Roll Out India’s First End-to-End Conversion-to-Completion Stack

Partnership Launch:

• PayU (payments) and GoKwik (checkout optimisation) introduced an integrated commerce layer for D2C brands to reduce checkout drop-offs and payment failures.  

Core Value:

• Combines GoKwik’s conversion intelligence with PayU’s scalable payment infrastructure for higher transaction success and seamless buyer experience.

• Targets revenue leakage in final purchase moments — critical pain point for maturing D2C sector.  

Early Results & Vision:

• Adopters (e.g., Frido) report conversion lifts and major success-rate gains.

• Positions D2C merchants for frictionless growth; reinforces support for India’s digital-first brand ecosystem driving innovation and jobs.  

C) Business Developments

1) JMJ Fintech Sends Final Call Notice for Partly Paid Shares Ahead of Forfeiture

Disclosure Update:

• JMJ Fintech Limited filed final demand cum forfeiture notice with BSE under SEBI LODR Regulation 30, dated March 10, 2026.

• Last chance for partly paid equity shareholders to clear dues before shares are forfeited.  

Payment Demand:

• ₹7.35 per share (₹7.00 face value + ₹0.35 premium).

• Board waived original 10% p.a. interest for this final call (decision from Jan 30, 2026 meeting).  

Timeline & Instructions:

• Payment window: March 11–25, 2026 (15 days) via Demand Draft/Cheque only.

• Payable to “JMJ FINTECH LIMITED – CALL MONEY-ALLOTMENT ACCOUNT” (A/c 8250516487); submit to Purva Sharegistry, Mumbai (no cash accepted).  

Issue Background:

• Tied to July 12, 2025 rights issue: up to 2.56 crore partly paid shares at ₹10.50 each.

• Trading of ₹3 partly paid shares (ISIN INE242Q01016) suspended since Dec 19, 2025 record date.  

2) RBI Rolls Out Digital Payments Awareness Week with ‘Safe Digital Payments’ Theme

Campaign Launch:

• RBI initiated Digital Payments Awareness Week under “Har Payment Digital” initiative; theme “Safe Digital Payments” runs until March 15, 2026. Fraud Statistics:

• ~₹22,000 crore lost to digital fraud in the past year; 77% of victims tricked by attractive offers.

• Inaugurated at SBI Kanpur administrative office with RBI Regional Director Rajeev Dwivedi and bank officials.  

Prevention Guidance:

• Rajneesh Kumar (SBI DGM): Awareness is key defence; report suspected fraud immediately to bank/police or dial 1930 to block accounts.

• Rajeev Dwivedi (RBI): Exercise extreme caution; avoid sharing personal details (photos, DOB, address) on social media — example given of extortion via shared travel photos.

Core Message:

• Greed and negligence are biggest risks; stay vigilant, report suspicious activity, and avoid over-reliance on mobiles/internet.  

D) Regulatory Insights

1) RBI Penalises Manappuram Finance ₹2.70 Lakh for KMP Variable Pay Violation

Penalty Order:

• ₹2.70 lakh imposed on March 09, 2026 under RBI Act Sections 58G(1)(b) & 58B(5)(aa).  

Non-Compliance Found:

• Paid entire variable pay upfront to certain Key Managerial Personnel without deferment as required.  

Basis:

• Identified during statutory inspection as on March 31, 2025.

• Penalty for breach of RBI Guidelines on Compensation of KMP; without prejudice to further actions.  

2) RBI Slaps ₹50,000 Penalty on Walchandnagar Sahakari Bank for KYC Review Failure

Penalty Order:

• ₹50,000 imposed on March 11, 2026 under BR Act Section 47A(1)(c) r/w Sections 46(4)(i) & 56.  

Violation Confirmed:

• No system in place for periodic review of account risk categorisation (minimum once every six months).  

Basis:

• Detected in statutory inspection as on March 31, 2025.

• Penalty for regulatory lapse; without prejudice to other actions.  

3) RBI Finalises Updates to Counterparty Credit Risk Add-on Factors

Amendment Scope:

• Issued third amendment directions across commercial banks, small finance banks, payments banks, and AIFIs.  

Key Revisions:

• Clarifies capital charge requirement for banks as clearing members in equity/commodity derivatives segments.

• Aligns CEM add-on factors for Interest Rate Contracts and Exchange Rate Contracts/Gold with BCBS guidelines.  

Process:

• Draft circulated August 20, 2025; feedback incorporated post-September 10, 2025 deadline.

• Objective: greater clarity and international alignment in CCR framework.  

4) RBI Issues Clarifications on Owned Fund / Tier 1 Capital for NBFCs & Related Norms

Amendment Coverage:

• Second amendment directions issued for NBFCs, Housing Finance Companies, Core Investment Companies, Mortgage Guarantee Companies, ARCs, Standalone Primary Dealers.  

Main Clarifications:

• Refines computation of Owned Fund / Tier 1 Capital for credit/investment concentration norm compliance.

• Addresses industry requests for greater consistency in application.  

Process:

• Drafts released January 13, 2026; final directions incorporate stakeholder feedback.

• Ensures uniform prudential treatment across NBFC categories.  

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.