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) KiVi and Avio Smart Market Stack Launch Agri-Fintech Initiative for Rural Maharashtra

Strategic Initiative:

• KiVi (Agrosperity Tech Solutions) and Avio Smart Market Stack Limited (ASMS) have begun groundwork to deploy agri-fintech solutions in key agricultural clusters of Maharashtra.

• Supa and Patas villages in Pune district have been identified as initial focus areas under ASMS’s Project AVIO Agritech.  

On-Ground Activities:

• Both companies are conducting field visits and engaging with farmers, rural enterprises, and distribution partners to assess financial needs, operational challenges, and ecosystem gaps.

• Insights gathered will help design scalable, data-driven financial solutions in collaboration with banking and institutional partners.  

Objectives & Vision:

• Aims to provide tailored financial services to rural communities using digital infrastructure, last-mile connectivity, and intelligent data frameworks.

• Goal is to create a seamless interface between financial institutions, rural distribution systems, and agri value chains to improve productivity, resilience, and economic outcomes for farmers.  

Stakeholder View:

• Dr. Raja Krishna Murthy M, Head – Agri Tech Business, ASMS, highlighted the commitment to empowering farmers and rural enterprises through technology-driven, scalable models that combine on-ground networks with digital innovation.  

2) M2P Fintech Appoints Vivek Seshadri as Group CFO Ahead of Potential IPO

Leadership Appointment:

• M2P Fintech has appointed Vivek Seshadri as its group chief financial officer.

• Seshadri will focus on driving capital discipline and building internal systems in preparation for a potential public listing in India.  

Professional Background:

• Brings over 15 years of experience, having worked with Hitachi Payments Services and held leadership roles in investment banking and investor relations at Avendus, JP Morgan, and UGro Capital.  

Company Profile:

• M2P Fintech provides digital banking infrastructure, including core banking platforms, card payment solutions, and lending software systems for fintechs, banks, and corporates.

• Chennai-headquartered company is backed by Beenext, Tiger Global, Flourish Ventures, and Taj Investment Holdings.

• Founded in 2014, it has raised $188 million so far and was last valued at around $769 million.  

Recent Performance:

• Closed FY25 with total revenue of ₹530 crore and a net loss of ₹251 crore.

• CEO Madhusudanan R stated that Seshadri’s expertise will strengthen financial foundations and support the company’s next stage of evolution.  

B) Economic Highlights

1) RBI Proposes Revised Framework for Prepaid Payment Instruments (PPIs)

Draft Master Direction:

• RBI has released a draft Master Direction on Prepaid Payment Instruments (PPIs) — the backbone of digital wallets and prepaid cards — inviting comments till May 22, 2026.  

Issuer Requirements:

• Banks permitted to issue debit cards can issue PPIs after informing DPSS, Mumbai.

• Non-bank entities require RBI authorisation; minimum net-worth of ₹5 crore at application and ₹15 crore by the end of the third financial year.  

Proposed Limits:

• General purpose PPI: Outstanding balance capped at ₹2 lakh; cash loading restricted to ₹10,000 per month.

• Gift PPI: Maximum value capped at ₹10,000.

• Transit PPI: Maximum value capped at ₹3,000.

• PPI for NRIs/foreign nationals: Issued after physical verification of passport and visa; monthly debit limit of ₹5 lakh against foreign exchange receipts.  

Objective:

• Aims to create a conducive framework for long-term growth of PPIs with enhanced transaction security, customer protection, and system efficiency.

2) RBI Updates E-Mandate Rules for Recurring Payments

New Threshold:

• Recurring payments up to ₹15,000 can now be processed without OTP under the e-mandate framework.

• Transactions above ₹15,000 require additional factor authentication.  

Key Exceptions:

• Insurance premiums, mutual fund subscriptions, and credit card bills between ₹15,000 and ₹1 lakh can proceed without OTP under specified conditions.  

Mandatory Safeguards:

• Pre-debit notification at least 24 hours in advance (including merchant name, amount, and date).

• Users can cancel or opt out before deduction.

• Post-debit alerts are compulsory, along with grievance redressal details.  

Additional Clarifications:

• No charges can be levied on customers for setting up or using e-mandates.

• Existing card mandates can be mapped to reissued cards for continuity.

• RBI’s customer liability rules for unauthorised transactions now extend to recurring payments.  

Impact:

• Aims to balance convenience for small recurring payments (e.g., OTT, utilities) with stronger protection for higher-value transactions while addressing concerns around unwanted auto-debits.  

3) CIBIL Score and Credit Report Now Accessible on BHIM Payments App

Integration Launch:

• TransUnion CIBIL has integrated its consumer CIBIL Score and Credit Information Report (CIR) into the BHIM Payments App developed by NPCI BHIM Services Limited (NBSL).  

User Benefits:

• BHIM users can securely access, view, and track their CIBIL Score and key credit information directly within the app.

• Follows a consent-based model, ensuring transparency and user control.  

Platform Features:

• BHIM supports 15+ Indian languages and a simple interface for urban, rural, and semi-urban users.

• Existing features include Split Expenses, Family Mode, Spends Analytics, and Action Needed reminders; CIBIL integration adds credit awareness to everyday financial management.  

Stakeholder Comments:

• Bhavesh Jain, MD & CEO, TransUnion CIBIL, highlighted the importance of credit awareness and inclusion for a resilient credit ecosystem.

• Lalitha Nataraj, MD & CEO, NPCI BHIM Services Ltd, noted that the integration extends simplicity and user control to credit health monitoring.  

C) Business Developments

1) UPI Payments Now Possible Without Internet or Smartphone

New Accessibility Options:

• The National Payments Corporation of India (NPCI) has introduced solutions allowing UPI payments without internet connectivity or a smartphone, particularly benefiting rural users with unreliable network access.

• Transactions can be completed in seconds using basic feature phones and calling features.  

Key Methods:

• Missed Call & IVR: Users dial specific IVR numbers (e.g., 08045163666, 08045163581, 6366200200), follow voice instructions, enter the amount, and verify with UPI PIN for instant transfer.

• Merchant Missed Call: Giving a missed call to the merchant triggers an automated IVR call for confirmation and completion.  

Feature Phone Solution:

• A special app developed in collaboration with Gupshup, Airtel Payments Bank, JioPay, and Jio Payments Bank allows feature phone users to register, link bank accounts via OTP, create UPI ID, and set a PIN.

• Audio signal technology between merchant device and customer phone enables payments without internet.  

Impact:

• These innovations build on UPI’s rapid growth in digital banking, making instant transfers more inclusive across the country.  

2) RBI Proposes Simplified and Safer Framework for Recurring Digital Payments

E-Mandate Updates:

• Under the new Digital Payments – E-Mandate Framework 2026, recurring payments up to ₹15,000 can proceed without OTP.

• Transactions above ₹15,000 require additional authentication, with an exception for insurance premiums, mutual fund subscriptions, and credit card bills up to ₹1 lakh under specific conditions.  

Customer Protection Measures:

• Mandatory 24-hour pre-debit notification detailing merchant name, amount, date, and reason.

• Users can modify, pause, cancel, or set caps on variable recurring payments at any time.

• Opt-out requests require additional authentication (e.g., OTP) to prevent fraud.  

Other Clarifications:

• No charges can be levied on customers for setting up or using e-mandates.

• Existing card mandates can be mapped to reissued cards for continuity.

• RBI’s customer liability rules for unauthorised transactions now apply to recurring payments.  

Objective:

• Aims to reduce friction for routine payments while enhancing user control and security across UPI, cards, and prepaid instruments.  

D) Regulatory Insights

1) RBI Imposes ₹80,000 Penalty on Muthoot Housing Finance Company

Penalty Details:

• Imposed on April 21, 2026, under the National Housing Bank Act for non-compliance with the Fair Practices Code.  

Violation Sustained:

• Failed to disclose the approach for gradation of risk and the rationale for charging different interest rates to different categories of borrowers in loan application forms and sanction letters.  

Context:

• Based on National Housing Bank’s statutory inspection as on March 31, 2025.

• The penalty addresses regulatory deficiencies and is without prejudice to any further actions.  

2) RBI Imposes ₹41.80 Lakh Penalty on Bandhan Bank

Penalty Details:

• Imposed on April 21, 2026, under the Banking Regulation Act for contravention of Section 20(1)(b)(iii) and non-compliance with Know Your Customer directions.  

Violations Sustained:

• Failed to carry out periodic review of risk categorisation of certain categories of accounts.

• Sanctioned director-related loans.  

Context:

• Identified during RBI’s Statutory Inspection for Supervisory Evaluation as on March 31, 2025.

• Penalty reflects statutory and regulatory lapses and is without prejudice to other actions.  

3) RBI Imposes ₹80,000 Penalty on Dr. Babasaheb Ambedkar Nagari Sahakari Bank

Penalty Details:

• Imposed on April 17, 2026, under the Banking Regulation Act for non-compliance with Exposure Norms & Statutory Restrictions for UCBs and Supervisory Action Framework instructions.  

Violations Sustained:

• Failed to adhere to the prescribed regulatory ceiling on certain advances.

• Offered interest rates on certain deposits higher than those of the State Bank of India, violating SAF directions.  

Context:

• Based on RBI’s statutory inspection as on March 31, 2025.

• The penalty addresses compliance deficiencies and is without prejudice to further actions.  

4) RBI Imposes ₹80,000 Penalty on Ebix Payment Services

Penalty Details:

• Imposed on April 17, 2026, under the Payment and Settlement Systems Act for non-compliance with Know Your Customer directions.  

Violation Sustained:

• Failed to carry out risk categorisation of its customers.  

Context:

• Identified during RBI’s statutory inspection for the period June 2024 to May 2025.

• The penalty reflects regulatory lapses and is without prejudice to other actions.  

5) RBI Cancels Licence of Paytm Payments Bank

Licence Revocation:

• On April 24, 2026, RBI cancelled the banking licence of Paytm Payments Bank Limited under Section 22(4) of the Banking Regulation Act, effective close of business on April 24, 2026.

• The bank is prohibited from conducting banking business (including acceptance and repayment of deposits) with immediate effect. RBI will apply for winding-up before the High Court.  

Reasons for Cancellation:

• Affairs conducted in a manner detrimental to the bank and its depositors.

• General character of management prejudicial to depositors and public interest.

• No useful purpose or public interest served by continuation.

• Failure to comply with conditions of the Payments Bank licence.  

Prior Actions & Depositor Protection:

• Earlier restrictions included stopping new customer onboarding (March 2022) and halting further deposits/credits/top-ups (January/February 2024).

• The bank has sufficient liquidity to repay all deposit liabilities upon winding-up.  

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.