Fintech Market Overview

This article does not constitute legal advice.

Fintech in India

Fintech Software

There is no special fintech licence in India and the regulations governing offline banking and financial services are also applicable to fintech companies. These include the onerous licensing and operational guidelines applicable to banks and non-banking financial companies (NBFCs), and more generally, the domestic laws relating to contracts, information technology, data protection, intellectual property, consumer protection and anti-money laundering and counter-terrorism financing. With rising fintech penetration in financial services, specific regulations for different activities are now evolving, including for NBFCs, payment systems, online payment intermediaries, small-scale payment banks, peer-based lending platforms and account aggregators.1

Although there are no tax incentives specifically designed for fintech companies in India, start-ups that are registered under the 'Startup India' scheme of the Indian government can benefit from various incentives, such as income tax exemptions, self-certification under labour and environment laws, intellectual property rights benefits and access to government-backed fund support. The Indian government, in light of the distress caused to companies due to the covid-19 pandemic, has increased the period in which income-tax exemption can be sought by start-ups under the scheme.1

The RBI is the primary regulator for most fintech activities in banking, payments and lending. The jurisdiction of other regulators may also get attracted, depending on the nature of the services being offered, including the Securities and Exchange Board of India (SEBI) when dealing in the securities market and the Insurance Regulatory and Development Authority of India for the insurance sector, as well as the Ministry of Electronics and Information Technology (MEITY) and the Ministry of Corporate Affairs, as may be applicable.1

It is significant to note that a growing number of fintech entities in India operate as third-party enablers providing technology and ancillary services to licensed entities, which in turn provide the underlying regulated financial services.1

The field of advertising is generally subject to a multiplicity of laws and codes in India to achieve fair practices aligned with antitrust principles, prohibit misleading or inaccurate statements, and restrict obscene, immoral or objectionable content from being published in any advertisement or marketing collateral.1

Crowdfunding in India

Fintech in other countries

  1. https://thelawreviews.co.uk/title/the-financial-technology-law-review/india
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