FinTech[1] has been a trending topic for quite some time now due to the ease of access it offers in a vast and diverse country such as India.India’s FinTech industry is one of the largest globally, boasting a staggering 9,000 fintech companies[2] and an adoption rate of approximately 87% as opposed to the global average rate of 64%[3]. The boom in FinTech that we are currently witnessing can be credited to the Central Government’s endorsement of digital payments (UPI) and the staggering increase in mobile users in the country.

Comparing India’s FinTech journey with global standards offers a compelling narrative. On the one hand, India’s fintech ecosystem is mirroring global trends, implementing cutting-edge solutions and pushing the boundaries of traditional finance. On the other hand, it grapples with a complex regulatory landscape that sets it apart from the more mature FinTech markets around the world.

FinTechs in India are regulated by a few bodies namely – RBI; SEBI; IRDAI; CERT – IN and National Payments Corporation of India (“authorities”), basis the function/service provided by the entity.

Key regulations:

    • Payment and Settlement Act, 2007
    • Prevention of Money Laundering Act, 2002
    • Master Directions – NBFC – P2P Lending Platform Directions, 2017
    • Master Direction on Digital Payment Security Controls, 2021
    • IT Act, 2000
    • Digital Personal Data Protection Act, 2023


  • Multiple regulators and the lack of a comprehensive regulation pose a major compliance roadblock to FinTechs in India.

The regulatory bodies are still coming to grips with the complex overlapping nature of the diverse service offerings; and applicable interjurisdictional laws which have led to constant changes to the applicable laws and regulations being implemented. The authorities are continually determining the potential loopholes in the regulations that currently exist and the implications of the service offerings. This has led to uncertainty in the applicable legislation due to the constant amendments to the existing legislation and introduction of fresh legislation. The pace at which new regulations are being introduced poses a compliance challenge to FinTechs.

The absence of a single umbrella legislation regulating the functioning of the industry; constantly evolving regulations; uncertainty over existing legislations; and a plethora of regulatory approvals pose a major challenge to FinTechs in India.

  • Data Privacy and Breach(es)

A breach in data privacy is one of the biggest compliance threats faced by the FinTechs and could lead to huge financial losses and reputational damage. The digital business models of FinTechs have made confidential customer information accessible to trustworthy entities, making the detection and prevention of data leaks and frauds. Thereby making the FinTechs responsible for ensuring adequate controls have been put in place to protect such confidential information.

  • KYC norms

The RBI has directed all financial institutions to mandatorily conduct KYC of each customer vide its master direction[4]. Compliance with the same requires a surmountable chunk of company funds to be dedicated due to the sheer volume of customers and their data that needs to be collected, stored and monitored.

How to navigate the aforementioned obstacles:

  • Fintechs should first identify all of the laws and regulations that are applicable to their business. This can be done by onboarding full-service law firms.
  • Fintechs should develop a compliance program to ensure that they are complying with all applicable laws and regulations. This program should include policies and procedures for managing risk, conducting due diligence on customers and counterparties, and reporting suspicious activity to the authorities.
  • Fintechs should collaborate with the authorities on a regular basis to learn about new and emerging regulations and to discuss any compliance challenges they may be facing. Additionally, FinTechs should participate in industry consultations on any proposed regulations, their inputs and expertise on the subject matter can ensure a fair equitable regulation of the industry.

India’s fintech landscape is constantly evolving, and FinTechs need to be proactive in staying up-to-date with the latest regulatory developments.

Despite the challenges, India’s fintech industry is poised for continued growth. By navigating the regulatory landscape effectively, fintech companies can help to build a more inclusive and efficient financial system.

Authors: Sindhuja Kashyap and Tanishq Acharya


[1] FinTech industry includes service offerings such as digital lending, digital payment, wealthtech, insurtech and virtual digital assets.


[3] Economic survey (2023) Economic Survey. Available at:

[4] Master Direction – Know Your Customer (KYC) Direction, 2016 [RBI/DBR/2015-16/18]

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