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 in India
1) Speedy Approval for Mergers Involving Indian Startups
India is simplifying the process for foreign startups merging with their Indian branches. This change, starting September 17, will remove the need for lengthy approvals from the National Company Law Tribunal (NCLT).
Instead, only the Reserve Bank of India (RBI) and government approvals are needed. This move benefits startups that want to move their headquarters to India, known as “reverse flipping.”
2) Moneyview Goes Unicorn with Jify Acquisition
Fintech platform Moneyview has bought startup Jify, pushing its valuation to $1.2 billion and making it a unicorn. The acquisition was made through a share swap, with Jify’s investors receiving shares in Moneyview.
No new funding was involved. Jify’s team will join Moneyview, which had previously raised $75 million at a $900 million valuation.
3) PhonePe Expands UPI Payments in Singapore
PhonePe has teamed up with Liquid Group to extend UPI payment options in Singapore. Indian travelers can now use PhonePe’s app to pay at various locations including Changi Airport and popular shops.
This partnership also allows PhonePe users to receive international remittances and make payments for services in India.
4) InCred CFO and Kotak President Start New Fintech Venture
Vivek Bansal, CFO of InCred, and Sunil Daga, President of Kotak Mahindra Bank, are launching a new MSME-focused NBFC called Saarathi Finance.
The company is seeking an NBFC license and aims to raise Rs 600 crore in funding.
Saarathi Finance will offer secured loans to MSMEs and personal loans through a digital-first approach, aiming to address the significant credit gap in the sector.
B) Banking and Economic Developments
1) RBI Maintains Stance on Digital Deposit Buffer Requirements
India’s Reserve Bank of India (RBI) is set to proceed with its plan to impose a higher digital deposit buffer on banks, despite industry pushback. The RBI proposed a 5% ‘run-off factor’ for digital retail deposits to mitigate risks from rapid withdrawals. This move aims to strengthen banks’ liquidity management, though it may impact their liquidity coverage ratios.
The industry, represented by the Indian Banks’ Association, has requested a reduction in this buffer, but the RBI is expected to maintain its current stance. The decision follows global regulatory trends triggered by the collapse of Silicon Valley Bank.
2) FinDoc Finvest Launches Digital Lending Services in India
FinDoc Finvest, an NBFC under FinDoc Financial Services, has introduced a digital lending platform offering short-term personal loans in India. This new service aims to bridge the credit gap for underserved populations, providing loans from Rs 25,000 to Rs 100,000 with repayment terms of 4 to 6 months.
The platform promises a paperless application process and instant approvals, targeting salaried individuals, self-employed professionals, and small business owners. The initiative reflects a broader trend of expanding digital lending to enhance financial inclusion.
3) Fintech Firms Dominate Personal Loan Market
Fintech companies have captured 52% of the personal loan market, facilitating over Rs 2.48 trillion in loans, according to Experian India. This growth is largely attributed to their reach into underserved segments and rural areas.
The report highlights significant increases in fintech penetration in various states, with personal and business loan growth noted in key regions. Despite their success, fintechs face challenges with higher Non-Performing Asset (NPA) ratios, underscoring the need for robust risk management practices.
4) Potential GST on Small Transactions for Payment Aggregators
The GST Council may introduce an 18% tax on payment aggregators for small transactions up to Rs 2,000. This potential change could impact payment methods for small-value transactions, such as those using debit and credit cards. Currently, these transactions are exempt from GST.
With more than 80% of digital payments in India falling into this category, the new tax could affect small businesses. The Unified Payments Interface (UPI) remains unaffected by this change, continuing to be a popular, no-cost option for such transactions.
C) New Business Developments
1) HDFC Bank and Juspay Launch Smart Gateway
HDFC Bank, in collaboration with fintech firm Juspay, has launched ‘Smart Gateway,’ a new payment solution aimed at enhancing online transaction experiences for businesses.
This gateway is designed to streamline payment processes, improve conversion rates, and offer robust fraud detection.
With features like user-friendly interfaces and advanced security measures, Smart Gateway is expected to support businesses in managing diverse payment methods and ensuring secure transactions.
2) RBI Issues Warning to HDFC Bank Over Recovery Agent Practices
The RBI has fined HDFC Bank ₹1 crore for breaching guidelines concerning recovery agents’ practices. The penalty addresses issues related to recovery agents contacting borrowers outside the permitted hours.
This enforcement emphasizes the need for compliance with privacy regulations and adherence to ethical practices in loan recovery processes.
The move highlights the RBI’s commitment to maintaining customer privacy and ensuring that lenders follow prescribed conduct standards.
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!
