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 Innovations
1) QuiD Cash Launches Advanced Tech Suite to Streamline MSME Lending
Overview: Bangalore-based fintech startup QuiD Cash has launched an innovative supply chain finance platform aimed at connecting MSMEs, suppliers, and lenders. This state-of-the-art tech suite integrates seamlessly with suppliers’ ERP systems, facilitating real-time invoice tracking and offering working capital financing options.
QuiD Score & Technology: QuiD Cash’s proprietary credit scoring system, known as QuiD Score, analyzes various data points to evaluate the Affordability, Willingness to repay, and Security (AWS) of borrowers. This model not only enhances capital protection but also promises a faster onboarding process for retailers and dealers.
Rewards System: The platform introduces QuiD Coins, a rewards system that incentivizes users for timely payments, offering a modern solution for supply chain financing.
2) M2P Fintech Edges Closer to Unicorn Status with $80M Funding
Overview: M2P Fintech, a provider of software solutions for banks, is nearing unicorn status after securing $80 million in a funding round led by Helios Investment Partners and Bank Muscat. The Chennai-based startup, which specializes in core banking and credit solutions, is now valued between $850 million and $900 million.
Strategic Focus: The company’s growth strategy is focused on expanding into the Middle East and Africa, driven by investors like Helios, who have deep ties in these regions. M2P aims to strengthen its international presence while continuing to build its software stack for financial services.
3) Revolut Eyes Middle East Expansion After Mubadala Investment
Overview: UK-based fintech giant Revolut has secured investment from Abu Dhabi’s Mubadala sovereign fund, positioning the company for significant expansion in the Middle East, particularly the UAE. With a valuation of $45 billion, Revolut is seeking regulatory approvals to offer electronic money and remittance services in the region.
Global Ambitions: CEO Nik Storonsky reaffirmed Revolut’s goal to become a “truly global bank,” with the UAE serving as a key hub for its Middle Eastern operations. This move is part of Revolut’s broader global vision to scale its services in new markets, including Saudi Arabia.
4) Revolut to Enter the Indian Market by 2025, Targeting Premium Consumers
Overview: Revolut, one of Europe’s most valuable fintech companies, is set to launch its services in India by 2025, aiming to attract premium consumers. The UK-based neobank received in-principle approval from the RBI earlier this year and is currently testing prepaid cards and wallets for the Indian market.
Focus on Profitability: With plans to serve India’s top 10-15 percent of consumers, Revolut aims to focus on profitability rather than rapid scaling. This strategic move aligns with its efforts to diversify its revenue streams and expand its footprint in high-growth markets like India.
B) India’s Economic Landscape
1) Veefin Solutions Expands via Acquisitions to Strengthen Lending Ecosystem
Overview: Veefin Group has announced its third acquisition this fiscal year, acquiring digital lending platform EpikIndifi in a cash and equity deal worth ₹125 crore. This acquisition is part of Veefin’s broader expansion strategy, transforming it into a comprehensive working capital finance platform.
Inorganic Growth Strategy: With total acquisition deals valued at ₹400 crore, Veefin Group has rapidly expanded its client base, aiming to reach over 500 banking and corporate clients by the end of the fiscal year. The company now offers a wide range of financial solutions, including supply chain finance and digital identity verification.
2) India on Course to Become World’s Third-Largest Economy by FY31: S&P
Overview: India is on track to become the world’s third-largest economy by 2030-31, according to a new report from S&P Global. The report forecasts a 6.7 percent annual growth rate for the country, driven by strong reforms, rising private sector investment, and improvements in infrastructure.
Key Growth Areas: Sectors like trade, energy, and agriculture are expected to play pivotal roles in India’s economic ascent, with increased reliance on renewable technologies and advanced agricultural methods to meet the country’s growing demands.
3) India and Singapore Explore Expanding Digital Payment Linkages Across ASEAN
Overview: India and Singapore are in discussions to expand their existing UPI-PayNow cross-border payment link to other ASEAN countries, following the success of their real-time payments collaboration launched in February 2023. This initiative aims to enhance regional digital payment integration, with Malaysia and Thailand among potential participants.
Investment Boost: During Prime Minister Modi’s recent visit to Singapore, agreements were signed that could bring an additional $60 billion in investments into India over the next three years, highlighting the deepening economic ties between the two nations.
4) UPI Transaction Limit Increased to ₹5 Lakh for Select Payments
Overview: Starting September 16, 2024, UPI users in India can make transactions up to ₹5 lakh for tax payments, hospital bills, and other eligible transactions. The National Payments Corporation of India (NPCI) raised the limit to accommodate higher-value payments and streamline the digital transaction process.
Bank-Specific Limits: While NPCI has issued a circular mandating the new limit, users are advised to check with their banks and UPI apps regarding compatibility, as individual banks may impose their own transaction caps.
C) Recent Business Initiatives
1) HDFC Bank Pursues Fintech Collaborations to Develop New Solutions
Overview: HDFC Bank is actively seeking partnerships with fintech firms to co-create solutions aimed at enhancing products across various categories, including mortgages, payments, customer service, and small business banking. The bank’s focus on collaboration is part of its growth strategy to scale its offerings in multiple sectors.
Key Areas of Focus: HDFC Bank’s past successful collaborations, such as with Zeta for PayzApp and Mintoak for Vyapaar, highlight the value fintech partnerships bring in terms of digital processes and faster turnaround times. The bank is now looking for partners to expand in areas like artificial intelligence (AI) and supply chain financing.
Fintech Incubator: The bank also launched a CoLab initiative in partnership with Pravega, a venture capital firm, to identify promising fintechs and work with them to co-create solutions for various business use cases.
2) AI and GenAI Fueling Financial Sector Innovation, Says PwC Report
Overview: Artificial Intelligence (AI) and Generative AI (GenAI) are becoming central to the innovation strategies of 90% of Indian financial institutions, according to a recent PwC India report. The study highlights AI’s role in customer acquisition, risk management, and regulatory compliance as key drivers of technological advancements in the sector.
Focus on Innovation: With 84% of respondents citing customer experience and engagement as areas for innovation, the financial services sector is actively leveraging AI to improve processes. The report also noted that data analytics plays a prominent role, with 74% of companies using it to drive insights and decision-making.
Challenges: Despite the advancements, companies face challenges such as resource constraints and technological complexity, underscoring the importance of balancing innovation with robust governance frameworks and regulatory compliance.
3) Karma Wallet Partners with Dyme Travel to Promote Eco-Friendly Travel
Overview: Karma Wallet, a fintech focused on promoting sustainable consumer behavior, has partnered with climate tech firm Dyme Travel to offer eco-friendly travel solutions. Through this collaboration, Karma Wallet members can now access exclusive travel deals and earn cashback, while also contributing to carbon reduction projects.
Sustainability Focus: Dyme Travel offsets carbon emissions for each trip booked on its platform, making it easier for consumers to travel responsibly. Karma Wallet users will benefit from savings at hotels, airlines, and car rental services while earning cashback on sustainable travel choices, aligning with the company’s mission of encouraging eco-conscious decisions.
D) Recent Regulatory Actions by RBI
1) RBI Levies Fine on Dr. Babasaheb Ambedkar Sahakari Bank for Loan Violations
Overview: The Reserve Bank of India (RBI) imposed a monetary penalty of ₹50,000 on Dr. Babasaheb Ambedkar Sahakari Bank Limited in Nashik for non-compliance with regulatory directions related to loans and advances. The penalty was issued for violating rules concerning loans provided to the bank’s directors and their relatives.
Regulatory Details: Following a statutory inspection by RBI, the bank was found to have sanctioned loans without adhering to proper procedures. The penalty underscores RBI’s commitment to enforcing strict compliance in the banking sector to ensure transparency and accountability.
2) RBI Penalizes Urban Co-operative Bank in Anantnag for Investment Rule Breach
Overview: The Urban Co-operative Bank Limited in Anantnag, Jammu & Kashmir, was fined ₹5 lakh by RBI for failing to comply with investment regulations. The bank was found in violation of exposure limits during an inspection related to its financial position as of March 2023.
Compliance Shortfalls: The bank exceeded the prudential inter-bank (gross) and counterparty exposure limits, leading to the imposition of the penalty. This action highlights RBI’s ongoing regulatory oversight and focus on enforcing prudential norms within co-operative banks to safeguard the financial system.
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!
