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Fintech Regulation In India

Fintechs (Financial technology) thrive to improve and automate the delivery and use of financial services while encouraging innovation. It is one of the most heavily regulated sectors. Not surprisingly, regulations have emerged as the number one concern among governments as fintech companies take off. Though, there is no universal regulatory body for fintech entities in India. Depending on the product or service offered by the entity, the regulatory body governing such vertical would regulate those specific entities.

By and large fintech products and services can be considered to fall under the purview of the following regulators:

  • Reserve Bank of India (RBI)
  • Securities Exchange Board of India (SEBI);
  • Ministry of Electronics and Information Technology (MEITY);
  • Ministry of Corporate Affairs; and
  • Insurance Regulatory and Development Authority of India (IRDAI).

However, the RBI currently regulates the majority of fintech companies dealing with account aggregation, peer-to-peer (P2P) lending, cryto­currencies, payments, etc. There are multiple categories of institutions that engage in lending. These are banks that include scheduled commercial banks and non-scheduled commercial banks, cooperative society banks, small finance banks, non-banking financial companies (NBFCs) and money lenders. 

Factoring can be undertaken by banks, NBFCs registered as factors with the RBI and other government entities. Invoice discounting can be undertaken by banks, NBFCs and corporates. Bonds and debentures can be listed on stock exchanges as public offerings. Syndications of loans are generally not regulated unless they are converted into securitised instruments. Payment services are also regulated and are particularly relevant to fintech. Entities in India can deal in foreign exchange trading only with permitted stock exchanges and banks in India. Other entities such as fully-fledged money changers are also permitted to deal with foreign exchange. Note that Indian residents are not permitted to trade in foreign exchange through overseas trading platforms.

RBI regulates Peer To Peer Lending

The RBI is the authority that regulates P2P lending in India. All P2P lending platforms are required to be registered with the RBI as an NBFC-P2P. The eligibility requirements for a company to register as a P2P lending platform include, among other things:

  • a minimum capital of 20 million rupees;
  • that the company applying for registration is incorporated in India;
  • a robust and secure information technology system must be in place;
  • there must be a viable business plan; and
    promoters and directors must fulfill the fit and proper criteria laid down by the RBI.

Although, fintech is already delivering significant benefits to consumers and investors; to financial services firms and financial market infrastructure, and to financial stability and financial inclusion. However, the increasing use of fintech solutions and emerging technologies also bring risks, to which regulators and supervisors are responding.

LenDenClub is India’s largest alternate investment platform which started operations in India in 2015. We have been helping investors diversify their investments beyond traditional investment instruments ever since.



The Reserve Bank of India does not accept any responsibility for the correctness of any of the statements or representations made or opinions expressed by Innofin Solutions Private Limited, and does not provide any assurance for repayment of the loans lent through its platform.

LenDenClub is an Intermediary under the provisions of the Information Technology Act, 2000 and virtually connects lenders and borrowers through its electronic platform via the website and/or mobile app.

The lending transaction is purely between lenders and borrowers at their own discretion, and LenDenClub does not assure loan fulfilment and/or investment returns. Also, the information provided on the platform is verified or checked on the best efforts basis without guaranteeing any accuracy of the data/information verification. Any investment decision taken by a lender on the basis of this information is at the discretion of the lender, and LenDenClub does not guarantee that the loan amount will be recovered from the borrower, fully or partially. The risk is entirely on the lender. LenDenClub will not be responsible for the full or partial loss of the principal and/or interest of lenders’ investment amounts.


*P2P investment is subject to risks. And investment decisions taken by a lender on the basis of this information are at the discretion of the lender, and LenDenClub does not guarantee that the loan amount will be recovered from the borrower.

** Average value mentioned is the weighted average of returns received by investors

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