Happy Monday, everyone!
MTLegal Team is bringing you a weekly update on everything that happened in the fintech space over the past week.
Our goal with these updates is to inform you about any new developments, trends, regulations, or notable events in the fintech sector.
This will help fintech companies plan, protect, and preserve their businesses based on market changes and regulatory updates.
Here’s last week’s update:
A) Fintech Advancements and Market Moves
1) MobiKwik Gets Green Light from Sebi for ₹700 Crore IPO
Overview: MobiKwik, a leading fintech company, has received approval from the Securities and Exchange Board of India (Sebi) to raise ₹700 crore through an Initial Public Offering (IPO). The proceeds are earmarked for business expansion, with significant investments planned in financial services, payments, AI, and machine learning.
Utilization of Funds: Out of the ₹700 crore, ₹250 crore will be used to enhance financial services, ₹135 crore for payment services, and ₹135 crore for AI, ML, and product technology. Additionally, ₹70.28 crore is allocated for capital expenditures related to payment devices. The IPO will be entirely composed of fresh issues, with no offer for sale (OFS) component.
Potential Pre-IPO Placement: The company is also considering a pre-IPO placement to raise ₹140 crore, which could reduce the fresh issue size.
2) M-KOPA Surpasses 5 Million Customers, Unlocks $1.5 Billion in Credit
Overview: Fintech firm M-KOPA has reached a milestone of 5 million customers across five African markets, including Kenya, Uganda, Nigeria, Ghana, and South Africa. The company has disbursed over $1.5 billion in financing, helping millions of financially excluded individuals access affordable smartphones and other financial services.
Business Model: M-KOPA’s unique model allows customers to acquire smartphones with daily repayments, which fit their income patterns. This system also builds credit histories, unlocking access to additional financial products like loans and insurance. The company’s CEO, Jesse Moore, expressed excitement about the scale of their operations and the opportunity for further expansion.
3) M2P Fintech Raises $101.8 Million to Fuel Global Expansion
Overview: M2P Fintech, an API infrastructure provider, has raised ₹850 crore ($101.8 million) in a funding round led by Helios Investment Partners. The fresh capital will support M2P’s expansion in India and international markets, particularly in Africa, a region identified as a key growth frontier.
Strategic Expansion: With operations across more than 30 markets in the Asia-Pacific, MENA, and Oceania regions, M2P powers financial services for over 200 banks and 300 lenders. The company aims to further solidify its market leadership by offering comprehensive “Bank in a Box” solutions, focusing on digital payments and credit card issuance tailored to local markets.
4) Zaggle Acquires 26% Stake in Mobileware Technologies to Enhance Payment Solutions
Overview: Zaggle, a SaaS fintech firm, has acquired a 26% stake in Mobileware Technologies for ₹15.6 crore, with the goal of strengthening its embedded payment solutions. This strategic investment will enable Zaggle to co-develop advanced payment solutions with Mobileware, enhancing digital transaction capabilities for their clients.
Technological Integration: Mobileware, headquartered in Mumbai, provides a range of digital transaction services, including UPI, IMPS, and Aadhaar-enabled payment systems. This collaboration is expected to drive innovations in the digital payments landscape, benefiting more than 80 banks and 20 fintech firms currently served by Mobileware.
B) India’s Economic and Fintech Outlook
1) Paytm’s Stock Soars 66% as Analysts Predict Further Gains
Overview: Paytm shares have surged 66% in the last six months, with Emkay Global raising its stock rating from ‘Reduce’ to ‘Add’. Emkay now forecasts a target price of ₹750 per share, reflecting optimism about Paytm’s future growth, driven by regulatory approvals and cost optimization measures.
Key Growth Drivers: Paytm’s loan distribution business is expected to accelerate, with merchant loans showing strong growth potential. Additionally, the company’s broking and insurance distribution segments have already turned profitable. Emkay predicts Paytm will achieve operating EBITDA positivity by the fourth quarter of FY25, ahead of earlier projections.
2) India Extends UPI Know-How to Africa and South America
Overview: India is actively helping countries in Africa and South America to establish digital payment systems modeled on its successful Unified Payments Interface (UPI). The National Payments Corporation of India (NPCI), through its international arm NIPL, is in discussions with several countries, aiming to launch two UPI-like systems by 2027.
Strategic Influence: India’s initiative to export its digital payments expertise underscores its ambition to play a leading role in shaping global financial ecosystems, particularly in emerging markets.
3) BharatPe Expands Offerings with ONDC Integration for Food Ordering
Overview: BharatPe has integrated the Open Network for Digital Commerce (ONDC) into its app, enabling users to order food from over 0.14 million restaurants across 400 cities. The move marks BharatPe’s expansion into consumer payments, complementing its existing merchant-focused services.
New Opportunities: The ONDC integration offers a major growth avenue for small and independent food outlets, providing them with access to a larger customer base. BharatPe’s foray into food ordering highlights its efforts to create a more inclusive digital economy by supporting small businesses.
C) Recent Business Developments in Fintech
1) Banking Tech Firms Thrive Amid Digital Transformation
Overview: As financial services undergo rapid digitization, banking technology providers like Zeta and M2P Fintech are seizing opportunities to expand their footprint. These firms offer critical digital solutions to banks, including core banking systems and payment applications. For instance, Zeta powers HDFC Bank’s PayZapp, while M2P Fintech handles the core banking system for Unity Small Finance Bank.
Global Expansion Plans: With the increasing global demand for digital payments and tech-based lending solutions, both companies are eyeing markets in North America, West Asia, Africa, and South Asia. M2P Fintech, backed by strategic investors like Helios Investment Partners, has already secured $100 million in funding, which will support its expansion in Africa and West Asia.
Growth Trajectory: M2P Fintech closed FY24 with a revenue run rate of $70 million and is aiming for $100 million in the current fiscal year. CEO Madhusudanan R also indicated plans for an IPO within the next two to three years, reflecting the firm’s growing market presence and future ambitions.
2) India and the Philippines Strengthen Fintech Ties
Overview: India and the Philippines are enhancing cooperation in financial technology through the recently inaugurated Joint Working Group (JWG) on fintech. This partnership, facilitated by the Department of Finance in the Philippines, is aimed at promoting financial inclusion and improving the fintech landscape in both countries.
Key Focus Areas: The JWG will address interoperability, digital payments, and infrastructure development, while also facilitating knowledge sharing on best practices and regulatory frameworks. This collaboration is part of a broader effort to build robust fintech ecosystems that benefit both individuals and businesses in the Philippines.
Growth Potential: The Philippines’ fintech sector has grown significantly, recording $110.5 billion in digital transactions last year. Both nations see vast potential in driving economic development through fintech, particularly in areas like digital payments and blockchain technology.
3) FinFusion Acquires iJeeva to Expand Fintech Solutions
Overview: FinFusion Solutions Inc., a startup IT consulting firm specializing in fintech, has acquired iJeeva Solutions Pvt Ltd, a move that strengthens its product offerings and market position. The acquisition will allow FinFusion to integrate iJeeva’s advanced fintech platforms, including its smart wallet, neo-banking services, and global payment gateway.
Strategic Expansion: This acquisition is part of FinFusion’s broader strategy to enhance its technology infrastructure and meet the growing demand for digital financial services. iJeeva’s expertise in software development will bolster FinFusion’s capabilities, allowing it to offer more comprehensive and integrated financial solutions to its clients.
Leadership Insight: Abhishek Tuppada, CEO of FinFusion, expressed enthusiasm about the acquisition, emphasizing that it will enable the company to stay ahead in the rapidly evolving fintech landscape by offering next-generation solutions to its clients.
D) RBI’s Regulatory Moves and Updates
1) RBI Imposes Restrictions on Shree Mahalaxmi Urban Co-operative Credit Bank Ltd.
Overview: The Reserve Bank of India (RBI) has imposed several restrictions on Shree Mahalaxmi Urban Co-operative Credit Bank Ltd. in Gokak, Karnataka, due to liquidity concerns. The bank is prohibited from granting loans, accepting fresh deposits, and making any investments without prior approval from the RBI.
Customer Impact: Due to the bank’s financial condition, depositors will not be able to withdraw funds, though loan set-offs against deposits are permitted. However, eligible depositors are entitled to receive up to ₹5 lakh from the Deposit Insurance and Credit Guarantee Corporation (DICGC).
Regulatory Action: These directives, aimed at safeguarding depositor interests, are effective for six months and may be modified based on further review by the RBI.
2) RBI Organizes Conference on Governance for Small Finance Banks
Overview: The Reserve Bank of India recently hosted a conference for Directors of Small Finance Banks (SFBs) in Bengaluru. The event, inaugurated by Deputy Governor Swaminathan J., focused on governance in SFBs and emphasized the importance of cybersecurity, risk management, and financial inclusion.
Key Discussions: During the conference, senior RBI officials led technical sessions on governance, business risk, and IT systems. A panel discussion featuring Independent Directors of select SFBs addressed the challenges and prospects of small finance banks. The event underscored the critical role of governance in driving sustainable growth for SFBs.
Takeaway: The conference is part of the RBI’s ongoing efforts to ensure that SFBs maintain strong governance frameworks, which are essential for long-term stability and financial inclusion.
3) RBI Fines The Bihar Awami Co-operative Bank Limited for Non-Compliance
Overview: The Reserve Bank of India has imposed a ₹1.5 lakh monetary penalty on The Bihar Awami Co-operative Bank Ltd. in Patna for failing to comply with certain regulations under the Banking Regulation Act, 1949. The violations included not transferring funds to the Depositor Education and Awareness Fund on time and failing to update risk categorizations for customers.
Background: The RBI’s action follows an inspection that revealed multiple non-compliance issues. Despite the penalty, the RBI clarified that this action is based on regulatory deficiencies and does not affect the validity of transactions between the bank and its customers.
4) The Surat People’s Co-operative Bank Faces ₹61.6 Lakh Penalty for Non-Compliance
Overview: The Reserve Bank of India imposed a ₹61.6 lakh penalty on The Surat People’s Co-operative Bank Ltd., Surat, for non-compliance with several regulatory directions. These include misclassification of loan accounts, sanctioning loans to directors, and charging fees for services without customer consent.
Regulatory Focus: The penalty underscores the RBI’s emphasis on regulatory compliance and governance. The bank’s failure to adhere to the norms on asset classification, customer service, and loan sanctions prompted this significant monetary fine.
Outcome: Although the penalty reflects the bank’s regulatory shortcomings, the RBI emphasized that this action does not invalidate any transactions made by the bank with its customers.
We hope you found this update insightful.
MTLegal Team is here to support everyone in the fintech sector—whether it’s for licensing, registration, or contractual needs.
We’ve got your back.
Contact us today, and let’s protect the business you’re building!
