You can see the rules and regulations in other jurisdictions.
The mutual funds industry in India (as discussed in Section IV) is increasingly taking advantage of fintech solutions to distribute its products, such as through online platforms. What's more, many fintech start-ups are devising automated tools and algorithms to provide financial advisory services with reduced human involvement. Investment advisers and asset management and mutual fund companies have to comply with the applicable securities regulations set by the SEBI, namely the IA Regulations for investment advisory services and the MF Regulations for mutual funds. This applies to both traditional and automated service models. To this end, SEBI has specified that investment advisers using automated tools cannot acquire consent from customers electronically when entering into an investment advisory agreement, according to the IA Regulations.1
Credit information services are regulated under the Credit Information Companies (Regulations) Act, which provides a framework to facilitate efficient credit distribution, including a registration requirement.1
Issuance and listing of debt securities in India is regulated under the SEBI (Issue and Listing of Debt Securities) Regulations. Tradable in a secondary market, these securities can be listed on one or more recognised stock exchanges only if the conditions set out in the relevant listing agreement and as specified by SEBI from time to time are met. Additionally, fintech companies accepting assignment of receivables or providing loans based on such securitised receivables (excluding banks and NBFCs granting debt against receivables as a normal practice) may trigger implementation of the Factoring Regulation Act, thus requiring them to register as NBFC-factors.1
Fintech players recognize the vast potential in India, given its huge population and access to inexpensive internet services. They have seen an opportunity in the underprivileged demographic, which may not have access to traditional financial offerings due to inadequate credit ratings or lack of availability. Consequently, several new fintech initiatives have emerged such as Toffee Insurance offering small-scale dengue insurance and GramCover's agricultural cover. These fresh models are designed to improve financial inclusion by providing flexible payment choices. Despite this progress, legal considerations remain a concern for these ventures.1
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