BFSI – Fintech & Financial Services

·       RBI – RBI is India's central bank and regulatory body under the jurisdiction of Ministry of Finance, Government of India, and regulates the banking and financial system, payment and settlement systems, the foreign exchange regime, and the currency system.

·       SEBI – SEBI is the regulatory body for securities and commodity market in India under the jurisdiction of Ministry of Finance, Government of India, and regulates the securities market, including securities such as shares, scrips, bonds, debentures, commodities, mutual funds and government securities.

·       IRDAI – IRDAI is a regulatory body under the jurisdiction of Ministry of Finance, Government of India and is tasked with regulating and licensing the insurance and re-insurance industries in India.

·       IFSCA- The IFSCA is a unified authority for the development and regulation of financial products, financial services and financial institutions in the International Financial Services Centre (IFSC) in India. At present, the GIFT IFSC is the maiden international financial services centre in India.

For undertaking Banking services or Payments, clearing and settlement services or Lending services – certain licenses / approvals from the RBI will have to be taken. For more information in this regard, please visit https://www.rbi.org.in/.

For undertaking Securities trading activities, certain licenses / approvals will have to be taken from SEBI. For more information in this regard, please visit https://www.sebi.gov.in/

Depending on the nature of the Investment management / advisory services or Market Provisioning services, approvals may have to be taken from IRDAI or SEBI or RBI or other sectoral regulators.

Cloud-based information technology services may require approvals under the Information Technology Act, 2000 and/or Information Technology (Intermediaries Guidelines) Rules 2011 from the Central Government and/or the relevant Ministry, or other sectoral regulators.

•    Peer-to-peer lending - Non-banking financial company-peer to peer (NBFC-P2P) platforms are governed by the NBFC-P2P Lending Platform Directions 2017, issued by the RBI. An NBFC-P2P is defined as a non-banking institution that acts as an intermediary to provide loan facilitation services, whether online or otherwise, to participants. This does not include loan facilitation services for institutional lenders such as banks or NBFCs. Any FinTech activities related to NBFC-P2P, will require approvals from the RBI. 

•    Payment platforms - The Reserve Bank of India has notified Guidelines for the Trade Receivables Discounting System (TReDS Guidelines) setting up an institutional mechanism for financing trade receivables of Micro, Small and Medium Enterprises (MSMEs) from corporate and other buyers including government departments and PSUs. TReDS covers clearing and settlement activities and is regulated as a payment system under the Payment and Settlement Systems Act 2007. For more information in this regard, please click here.

RBI regulates payments-related activities in India and issues circulars and directions applicable to different payments-related activities. Payment services are regulated under the Payment and Settlement Systems Act 2007. A payment system is defined as ‘a system that enables payment to be effected between a payer and a beneficiary, involving clearing, payment or settlement service or all of them, but does not include a stock exchange’. These include credit cards, debit cards, smart cards and money transfers. Any entity interested in commencing a payment system is required to obtain authorisation from RBI.

The payment providers broadly fall under the following categories: payment aggregators and payment gateways, prepaid payment instruments, financial market infrastructure (clearing houses), retail payment organisations, card payment networks (Visa, MasterCard, etc), cross-border money transfers, ATM networks, white-label ATM operators and instant money transfer.

There are three types of prepaid payment instruments: open payment instruments, which are payment instruments that can be used to make a payment to any merchant; semi-closed, which are payment instruments that can be used to make payment to a defined set of merchants; and closed, which are payment instruments of a merchant for payment only to that merchant.

For more information, please click here.