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Finance Minister Nirmala Sitharaman engages with fintech startups to stress the significance of compliance, fostering regulatory alignment in the sector.

In a meeting with Indian fintech startups, Finance Minister Nirmala Sitharaman stressed the importance of complying with norms and safeguarding consumer rights. The aim of the meeting was to tackle challenges and talk about problems in the fintech industry.

Why was the meeting required?

Fintech remains a major player in the Indian startup scene, despite some challenges. Several fintech startups have secured significant funding in the past couple of years, with over 726 Indian fintech startups raising more than $28 billion between 2014 and 2023. In 2023, four fintechs – PhonePe, DMIFinance, Perfios, and InsuranceDekho – each raised over $100 million.

However, the Reserve Bank of India (RBI) has issued several orders recently to improve regulation in the fintech sector. Some of these orders have impacted fintech startups, leading some to change their business models. After the RBI’s action on Paytm Payments Bank, some fintech founders expressed concerns, describing the central bank’s order as “harsh.”

The recent meeting with fintech stakeholders, including the finance minister, was seen as an attempt by the government to address concerns within the fintech ecosystem. Interestingly, there were no expressions of worry or specific concerns related to Paytm Payments Bank from startup founders during the meeting.

Who was at this meeting?

The meeting was attended by high-ranking officials, including a deputy governor from the Reserve Bank of India (RBI), and secretaries from various departments and ministries like finance, DPIIT, and MeitY.

From the fintech sector, notable attendees included Amrish Rau from Pine Labs, Kunal Shah from CRED, Jitendra Gupta from Jupiter, and Yashish Dahiya from Policybazaar.

Heads of banks such as State Bank of India, Union Bank of India, and Canara Bank were also present. Representatives from PhonePe, Google Pay, Razorpay, and key officials from the NPCI were reportedly in attendance as well.

Key Takeaways from the Fintech Startup Meeting

• Finance Minister Sitharaman proposed that the RBI should conduct monthly meetings with fintech startups to promptly address any sector-related issues.
• The meeting primarily focused on concerns regarding Know Your Customer (KYC) compliance and emphasised the importance of cyber security to safeguard digital financial systems.
• Additionally, the meeting touched upon the topic of “dual listing of foreign equities of fintech companies.” About 40 startups participated in the meeting and sought further clarification on foreign direct investment (FDI) in the sector.

Reactions to the meeting

Fintech founders expressed appreciation for the engagement and dialogue with policymakers, highlighting the positive exchange and encouragement received.

Kunal Shah, the founder of CRED, praised the policymakers for their proactive approach and collaboration with fintech startups. He thanked the finance ministry and RBI for their candid discussions, support, and recognition of the important role fintechs play in advancing India’s economic and social goals.

Deepak Shenoy, the founder and CEO of Capitalminds, also shared his excitement, describing the meeting with the Finance Minister, RBI, DPIIT, and MEITY, along with other fintech leaders, as incredible. He was impressed by the enthusiasm, determination, and readiness for action demonstrated during the meeting. Shenoy appreciated the government’s openness to feedback and its commitment to improving the fintech ecosystem, which left him impressed and motivated.

What Does This Mean For Regulatory Sandbox(RS) Entities Like Fintech Companies?

While the RBI’s measures can seem sudden and harsh, it’s undeniably the need of the hour given the significance of ‘new oil’ and the importance of safeguarding it. It’s reassuring to see RBI’s proactive approach in directing organisations to prioritise privacy compliance and handle personal data responsibly.

DPDP Consultants lead the way as the first movers in techno consultancy and privacy law — ready to support and partner with your organisation to achieve compliance, no matter how intricate your needs may be. From a DPDPA Readiness Review to comprehensive DPDPA Compliance Assistance, we have everything your organisation needs to access gaps and build DPDP compliance.

DPDP Consultants lead the way as the first movers in techno consultancy and privacy law — ready to support and partner with your organisation to achieve compliance, no matter how intricate your needs may be. From a DPDPA Readiness Review to comprehensive DPDPA Compliance Assistance, we have everything your organisation needs to access gaps and build DPDP compliance.

DPDPA Consultants develop tailored solutions to suit your organisation’s requirements, providing you with cutting-edge automation tools to navigate and adhere to these regulations efficiently.

• Data Principal Consent Management (DPCM)
• Data Protection Impact Assessment (DPIA)
• Data Principal Grievance Redressal (DPGR)
• Data Protection Awareness Program (DPAP)

Fintech companies are the largest sector within the startup ecosystem. Despite regulatory challenges and a funding downturn, the fintech sector continues flourishing. DPDPA Compliance will ensure that companies continue to grow and thrive while also maintaining responsible handling of personal Data.

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