You can see the rules and regulations in other jurisdictions.
India has no regulatory framework that permits foreign licences to be utilised directly in the country. Consequently, companies which hold such foreign licences should obtain authorisation within the ambit of applicable Indian laws before providing financial services in India. However, obtaining such permission may be less difficult for entities that have existing licences in other countries due to relaxed FDI regulations. The Indian government allows for FDI up to 100 per cent to most of the financial institutions regulated by RBI and SEBI, as long as there is compliance with specified conditions and related regulations.1
If and to what extent fintech services or products can be offered in India without a physical presence or license, the restrictions are largely determined by Indian regulation. A number of fintech products and services, such as payment wallets, peer-to-peer lending platforms, and investment advisory services, cannot be provided by entities incorporated and registered in India under the current regulatory framework. In addition, foreign entities seeking to provide payment and settlement services in India must obtain RBI approval in advance. Only RBI-authorised entities can deal in foreign currency or foreign securities as authorised dealers, money changers, and offshore banking units in India. Cross-border payments and transactions are strictly regulated. Thus, SEBI's jurisdiction is limited to Indian securities markets, and services to Indian investors related to global markets may fall outside the SEBI's jurisdiction.1
Foreign entities providing fintech services in India need to localise financial data by hosting it on servers or hardware located in the country, including payment system providers, intermediaries and peer-based lending platforms. Cross-border payment transactions may require temporary transfer of the information abroad for processing purposes; however, it must then be deleted off foreign systems and solely stored in India. This essentially prohibits its placement on a cloud or server outside India.1
In addition to the Indian Companies Act, foreign companies with a 'place of business' in India or conducting business activities through electronic mode, may be subject to the recently amended Consumer Protection Act 2019 and the Consumer Protection (E-Commerce) Rules 2020. These regulations specifically cover e-commerce, including buying or selling of goods and services over digital or electronic networks, as well as banking, finance, and insurance operations. Moreover, these rules even apply to foreign e-commerce entities which offer goods or services to consumers based in India without necessarily having an established presence there.1
To align India with global financial hubs and attract overseas investors, the Indian government has recently developed a regulatory framework for setting up international financial services centres (IFSCs) under the jurisdiction of a single regulator (i.e., the International Financial Services Centres Authority (IFSCA)). An IFSC is an economic zone and financial center located within India that is envisioned as a special economic zone.1
Recently, various writs and public interest litigations were filed in India against fintech firms, concerning matters like breaching authorisation regulations, data localisation and data exploit. These petitions primarily demand that the courts put a stop to foreign fintech businesses running their activities without a local office in India and order the governing bodies to put into effect more stringent legal rules for tech companies working within the financial sector in India.1
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