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) Evolving Fintech Landscape
1) Purplle Secures Additional $60 Million in Series F, Expands Offline Presence
Beauty Retailer Grows: Indian beauty e-commerce platform Purplle has successfully raised another $60 million in its Series F round, pushing its total to nearly $180 million and boosting its valuation to $1.25 billion. The funding round was led by Abu Dhabi Investment Authority (ADIA) with support from existing investors like Premji Invest and Blume Ventures, and newcomers like Rishabh Mariwala’s Sharrp Ventures.
Strategic Expansion: With a focus on expanding its physical retail presence, particularly in Tier 2 and Tier 3 cities, Purplle aims to meet rising consumer demand for in-store shopping. The company’s private-label portfolio, including brands like GoodVibes and Carmesi, plays a crucial role in this growth.
Operational Success: Purplle has reported a 43% increase in operating revenue in FY24 and narrowed its losses by 46%. The unicorn status it achieved in 2022 further underlines its continued success in the competitive beauty retail market.
2) Fintech Sector Sees 66% Growth in Funding, Despite Fewer Rounds
Recovery in Fintech Funding: Indian fintech companies recorded a 66% year-on-year increase in funding, reaching $778 million in Q3 2024. Despite the funding growth, the number of funding rounds dropped by 25% from the same period last year.
Key Drivers: The rise in funding was mainly driven by consumer and SME loans firm DMI Finance, which raised $334 million. Alternative lending and investment tech were the top segments that attracted the highest funding, signaling continued investor interest in the sector’s potential.
Global Standings: India remains the fourth-largest fintech ecosystem globally, behind the US, China, and the UK, positioning itself for further growth with rising digital adoption.
3) slice Receives Board Approval to Raise INR 71.73 Crore via Partly Paid-Up Shares
New Fundraising Strategy: Fintech startup slice, known for its innovative credit products, has received board approval to raise ₹71.73 crore (~$8.6 million) through partly paid-up shares. This follows a recent resolution to raise ₹300 crore through compulsory convertible debentures.
Targeting Growth: Founded in 2016, slice began as a BNPL (buy now, pay later) platform and is now expanding its financial offerings. With this latest capital raise, the company plans to strengthen its position in the digital payments landscape.
4) 8i Ventures Fully Exits M2P Fintech with 12X Returns
Profitable Exit: Early-stage investor 8i Ventures announced a complete exit from its investment in M2P Fintech, reaping a 12X return. This success follows M2P’s Series D round closure and highlights 8i’s strategic investment foresight.
Investment Success: Having initially invested ₹9.7 crore in 2020, 8i Ventures’ exit underscores the potential of fintech infrastructure platforms and the strength of the Indian fintech ecosystem. The fund’s overall portfolio continues to outperform, with a reported 37% IRR.
5) RBI Clampdown Threatens Fintech-NBFC Co-Lending Models
RBI Action on High Interest Rates: The Reserve Bank of India (RBI) has raised concerns over high interest rates in fintech-NBFC co-lending arrangements, resulting in regulatory actions against major players like Navi and DMI Finance. These developments could put fintech lenders under pressure to revise their models.
Industry Response: With co-lending being a major growth driver for fintechs, the RBI’s scrutiny may force NBFCs to reconsider partnerships. The focus on interest rates and regulatory compliance is expected to reshape the landscape of unsecured lending in the coming months.
B) India’s Economic Landscape
1) Mastercard Launches New Tech Hub in Pune to Boost Global Innovation
Expanding Tech Operations: Mastercard has opened a cutting-edge Tech Hub in Pune to drive its global growth and innovation efforts. This state-of-the-art campus will be home to over 6,000 technologists, making it Mastercard’s largest global workforce hub.
Focus on Innovation: The Pune Tech Hub will support key initiatives such as financial inclusion platforms and secure digital identity systems, reinforcing Mastercard’s commitment to India’s digital economy.
2) Report Highlights Unicorn Success Stories in India’s Startup Ecosystem
Unicorns Achieving Milestones: According to a new report, 60% of Indian unicorn founders achieved their $1 billion valuations on their first attempt. Notable unicorns such as Zepto, Krutrim, and Perfios are among the latest additions to India’s growing list.
Faster Growth in Second Attempts: Founders who achieved unicorn status on their second attempt did so in a median time of just 1.5 years, showing that prior experience significantly accelerates growth in India’s startup landscape.
3) Axis Bank Takes Top Spot as UPI Payer Service Provider
Leading the Digital Payment Revolution: Axis Bank has achieved the No. 1 position as the UPI Payer Payment Service Provider (PSP) in India, holding a 30.87% market share as of September 2024. This accomplishment is a testament to the bank’s focus on innovation and strategic partnerships with fintech players.
Collaborative Approach: Axis Bank has partnered with 15 third-party app providers, including Google Pay, PhonePe, and Paytm, to offer a seamless UPI experience, cementing its leadership in India’s digital payments space.
4) SEBI Approves Jio-BlackRock Mutual Fund Venture to Disrupt India’s Investment Market
New Player in Mutual Funds: SEBI has approved the joint venture between Jio Financial Services and BlackRock, marking a significant shift in India’s mutual fund landscape. The $300 million collaboration aims to bring innovative investment products to India’s growing financial market.
Digital-First Focus: Leveraging Jio’s vast customer base and BlackRock’s global expertise, the venture is poised to capture significant market share by offering accessible and technology-driven financial solutions.
5) Biz2X Surpasses ₹9,000 Crore in Loan Disbursements, Plans Further Growth
Digital Lending Milestone: Biz2X, the digital lending platform of Biz2Credit, has crossed ₹9,000 crore in loan disbursements. The platform’s AI-powered solutions have been a major driver of its success, optimizing lending functions for Indian financial institutions.
Future Plans: With plans to disburse an additional ₹5,000 crore by FY2025, Biz2X is set to further expand its impact in both domestic and international markets, including the UAE and Saudi Arabia.
C) Recent Business Milestones
1) Sahm Capital Gains Full CMA Licensing, Leads Fintech Innovation in Saudi Arabia
Regulatory Achievement: Sahm Capital, a rapidly growing fintech company in Saudi Arabia, has achieved a major milestone by securing full licensing from the Capital Market Authority (CMA). This positions Sahm as the first fintech-driven financial firm to obtain comprehensive CMA approvals for managing investments and operating funds in securities.
Market Leadership: Since its inception in 2022, Sahm Capital has quickly established itself as a significant player in the financial services sector. In just one year, the company met all business commencement requirements, reflecting its commitment to transparency, trust, and compliance with regulatory frameworks.
Future Ambitions: General Manager Hadeel Bedeeri emphasized that this achievement aligns with Sahm’s mission to support Saudi Arabia’s Vision 2030 and play a vital role in the growth of the Kingdom’s financial sector.
2) Aditya Birla Housing Finance Partners with BharatPe for Secured Lending Revolution
New Lending Partnership: Aditya Birla Housing Finance (ABHFL) has partnered with BharatPe to bring secured lending solutions to over 1.3 crore merchants across 450+ cities. This collaboration enables merchants to access home loans and loans against property directly through BharatPe’s digital platform.
Focus on Tier 2 and 3 Markets: The partnership aims to simplify access to financial solutions in underserved regions of India, leveraging both ABHFL’s financial expertise and BharatPe’s vast merchant network.
Strategic Growth: The partnership aligns with both companies’ focus on expanding their digital footprint and offering innovative, region-specific financial services tailored to the evolving needs of merchants in India.
3) Cred Expands Financial Services with New Payment Products
New Offerings: Cred, a fintech firm, announced the launch of new features, including a wallet feature that allows users to preload funds and make payments at partner merchants like Swiggy and BookMyShow. The wallet feature doesn’t require a PIN or OTP, simplifying transactions.
Rewards Expansion: The company is also extending its rewards program to select merchant partners, enhancing customer engagement through vouchers and cashback across various payment methods.
Strategic Growth: These new features reflect Cred’s broader goal of expanding its financial services offerings to its growing user base of 14 million members and merchants.
D) Key Regulatory Updates
1) RBI Halts Loan Disbursal for 4 NBFCs Amid Compliance Concerns
Regulatory Action: The Reserve Bank of India (RBI) has ordered four non-banking financial companies (NBFCs) to stop loan disbursements, citing non-compliance with its pricing policy and regulatory standards. The affected companies—Asirvad Micro Finance, Arohan Financial Services, DMI Finance, and Navi Finserv—have been found charging excessive interest rates and not adhering to fair lending practices.
Policy Breach: The RBI noted violations in evaluating household incomes and managing repayment capacities, stressing that NBFCs must comply with the central bank’s guidelines on pricing and risk management.
Reassessment Process: The companies will need to implement corrective measures before resuming operations, with the RBI closely monitoring their compliance efforts.
2) RBI Revises Access Criteria for NDS-OM Trading Platform
Expanded Access: The Reserve Bank of India has revised the access criteria for its Negotiated Dealing System-Order Matching (NDS-OM) platform, allowing more regulated entities to engage in government securities trading.
Streamlined Process: The revised guidelines simplify the process for entities to seek direct access to NDS-OM, aligning the criteria with broader regulations in India’s payment system.
Immediate Implementation: These updated directions, effective immediately, replace previous guidelines from 2008 and 2011, aiming to enhance transparency and participation in the financial market.
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!
