This article has been written by Vedansh Tripathi pursuing a Diploma in Technology Law, Fintech Regulations and Technology Contracts course from LawSikho.

This article has been edited and published by Shashwat Kaushik.


The fintech industry has revolutionised the financial industry worldwide. India witnessed the revolution in 2015, when several startups set up their businesses in the Indian market. Thereon, the Indian fintech industry has seen exponential growth, placing it at 3rd rank among the countries with the most fintech startups in the world, followed by the United States of America and the United Kingdom. Fintech marketing is expecting a compound annual growth rate (CAGR) of 31% by 2025, where the expected growth is up to 150 billion dollars.

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In 2021, the Indian fintech industry raised 10.6 billion dollars and applied for IPOs, mergers and acquisitions to boost growth. Post Covid-19 Pandemic Fintech companies like Paytm, Google Pay, Bharatpe, etc. have seen exponential growth.

According to a report, out of 100 startups that turned into unicorns in 2022, 21 startups were fintech unicorns.

The fintech industry has improved the overall banking industry. From a Rs 69 trillion transaction in 2019 to an expected rise in growth of Rs 238 trillion by 2025. The fintech industry has grown exponentially, making people’s lives easier and improving the financial market a lot. The fintech industry has raised huge investments from venture capitalists and investors.

Understanding India’s fintech industry

Fintech stands for financial technology. Over the years, the fintech industry has evolved a lot and has become a part of everyday financial activity across the globe. It is used to make customers lives easier by delivering innovative solutions, applications, and services in the financial sector. This has led to huge cost reduction and increasing convenience for customers through technology. Fintech use several technology like Blockchain, Cloud Computing artificial intelligence, etc. It focuses on improving convenience and provided more accessible and efficient financial services to the public.

India, post demonitisation has seen significant growth in the fintech industry. The adaptation of technology and the use of digital payments are prevalent. It is being implemented even in the rural parts of the country. 

Rural India is also becoming well versed with fintech application like digital payments, lending, etc. There are fintech startups that are helping rural India grow, which we shall discuss further. There is still a large population in India that is not well versed in the banking system so fintech is a farfetched thing for them. Cash is still the mode of payment in several parts of the country. If the Indian fintech industry becomes accessible and is able to tap into the rural population, it will soon be the biggest player in the fintech industry in the world, considering the population of the country.

Types of fintech

There are several ways fintech is used to cater to financial services. Some common types of fintech include:

Payment and digital wallet

According to, “a mobile wallet is a way to carry cash in digital format. You can link your credit card or debit card information on your mobile device to the mobile wallet application or you can transfer money online to the mobile wallet. Instead of using your physical plastic card to make purchases, you can pay with your smartphone, tablet, or smart watch. An individual’s account is required to be linked to the digital wallet to load money in it. Most banks have their e-wallets and some private companies do. e.g. Paytm, Freecharge, Mobikwik, Oxigen, mRuppee, Airtel Money, Jio Money, SBI Buddy, itz Cash, Citrus Pay, Vodafone M-Pesa, Axis Bank Lime, ICICI Pockets, SpeedPay, etc”- 

Online lending and P2P

Fintech startups tend to create a connection between the borrower and the lender, removing the traditional banking intermediary by providing loans through an online platform and creating a link between buyer and seller. Eg: Prosper

Digital banking

Operating the banking system through a mobile application and removing the barrier of a physical branch for financial services is known as digital banking. This system makes banking really effective and convenient for the customers.

Crowdfunding and fundraising

Crowdfunding and fundraising are basically raising money from donors and investors for startups, social cause and projects through online platforms. It creates a link between the donor and the donee. In India, there are fintech platforms like KETTO, Impact Guru, etc. that have raised huge amounts.

Wealth management

Financial markets leverage technology using artificial intelligence and machine learning to optimise the stock market, making trading easier and more convenient for investors.  More investors tend to invest in stocks, Mutual funds, bonds, etc. This solution has led to huge amounts of investor investment in the market, which can lead to the exponential growth of the economy. E.g.: Zerodha, Motilal Oswal, Groww, etc.

Personal financing

These solutions help people manage their finances with ease and create a digital accountability system for tracking their finances. Eg: MINT

Regulatory tech

Regulatory Tech has leveraged technology for optimisation and making regulatory compliance easy. These include KYC, AML, etc.

India’s positioning in fintech industry on global level

In an article published by Livemint, India is ranked 3rd among the countries with the highest number of unicorn fintech startups in 2023. India has a total of 17 fintech startups that have turned unicorns as of 2023. 

India is expected to grow and achieve the following numbers by 2030:

  • Fintech Market- 2.1 trillion Dollars
  • Payment Landscape in transactional volume- 10 trillion Dollars
  • Digital Lending Market- 720 Billion Dollars
  • Insuretech Market- 88.4 Billion Dollars
  • Wealthtech Market- 237 Billion Dollars

Indian fintech startups have received major funding from several investors. Even though funding dipped from 5.6 billion dollars to 2 billion dollars in 2023 by 63%. Still, India stands strong in the fintech industry as the third highest funded ecosystem globally.

Impact of Fintech in rural areas

After demonetization, India saw the need to adopt technology in financial activities. More than 2/3rd of the Indian population resides in rural India. The need for financial technology and literacy has become a must in the population too. Unlike western countries, India remains behind in the fintech sector even though it has the second largest population in the country. It is due to a lack of commercial banks, infrastructure facilities, availability of electricty,  illiteracy, theft, etc. that India is behind.

The usage of fintech has increased in rural areas a lot in the following years. Prime Minister Narendra Modi’s vision of Atmnanirbhar Bharat is fueled a lot by digitalization, which is gaining popularity on a substantial level in India.

Ways adopted to increase income in rural areas

Fintech expanding in rural areas has helped a lot in reducing poverty. Ways adopted to increase income in rural areas are:

Access to financial services and investment opportunities

The digitization of banking and payment has removed the geographical barriers faced by people. India has witnessed rapid growth in the fintech industry in rural areas. Now people can open bank accounts, make payments and transfer funds conveniently at the tip of their fingers. E.g.: apps like Google Pay, Paytm, PhonePe, etc. are used to transfer money digitally instead of going to the bank to deposit or transfer the money physically. This has made investments as well as transfers easier, leading to people experiencing growth in their income.

Lending services

Fintech startups have made the sanctioning of small loans and microfinances much easier for people in rural areas. Growth and expansion of businesses as well as farmers in rural areas have become significantly easier, helping in the reduction of poverty.

Agritech industry

Agricultural distribution has been a cluttered market in the past. With agritech startups coming up, they’ve tailored services according to the convenience and needs of the farmers. By providing them with financial, environmental, and market trends, techniques, etc., it enhances their ability to make informed decisions. With agritech and fintech startups coming into play, farmers will receive better payments for their produce, an increase in their income, and connections to buyers in the market through online platforms.

Employment opportunites

Growth in fintech startups has increased employment opportunities for people in rural areas. By making them equipped with skills pertaining to services provided at service centres, call centre and other digital places in rural areas. This has also upskilled people in rural areas, making them more employable.

Fintech startups offering financial services in rural India

There are several fintech startups that are helping rural areas bridge the financial gaps in India. I have mentioned a few startups here:


Banksathi provides customers with production recommendations in a variety of financial categories, including bank accounts,credit cards, demat accounts and insurance policies, by leveraging technology. It has an IRDA (Insurance Regulatory and Development authority) approved insurance licence, which is eligible and allowed to offer a diverse portfolio of financial products, providing the most affordable insurance options for Tier 2, 3 and remote locations in India. It has a network of 1.5 million financial advisors providing service across 18,000 pin codes.


Propelld is a bangalore based fintech startup specialising in education lending. Access to education and improvement in India’s gross enrollment ratio (GER) is the main aim of the startup. It aims to do so by removing financial barriers to provide the right education by providing customised and personalised loans based upon students conditions and preferences. It focuses on providing financial aid to the students based on their potential, contrary to the traditional lending system.


Bharatpe is a fintech startup aimed at providing digital payment solutions to small companies and merchants. It aims at providing services like UPI payments, payments via QR codes, and credit and debit card payments. It is also a lender to merchants and small enterprises for business expansion, providing them with loans under a stipulated time of 24 hours with less documentation.


Khatabook is an app that provides the function of digital ledgers designed to track transactions and outlay to assist small businesses. It enables small businesses to keep a digital ledger, create invoice and remind clients to make payments. It’s available in several languages and has a presence in more than 700 locations.

Benefits of fintech for growing business in India

Fintech has brought significant changes to Indian businesses, especially in the startup ecosystem. Small businesses have benefited alot lot from the fintech coming into play, including auto regulation, lending,wealth management, etc. Fintech is cost effective as well as convenient for startups, helping them grow exponentially without having to worry about many things and allowing them to focus on building their businesses.

According to an article published by Razorpay, young startup founders face major obstacles. These obstacles are:

  1. Gathering capital;
  2. Tax compliances;
  3. Accounting and regulatory compliances;
  4. Time management amidst high growth; and
  5. Detailed financial insights for better decision making.

Fintech in India is used in several aspects by founders. We’ve already discussed the type of fintech in the fintech section of this article.

Recent developments in fintech industry in India

The Reserve Bank of India (RBI) is planning to establish a fintech repository and a new cloud facility by April 2024. It has assigned the task of setting up and operating to Indian Financial Tech and Allied Services (IFTAS), which is a new wholly owned subsidiary.

Measures expected to be taken by RBI:

  1. Increasing unified payment interface (UPI) payment limit to hospitals and educational institutions from Rs 1 lakh to Rs 5 lakh per transaction.
  2. Bringing Web-Aggregator of Loan Products (WALPs) to regulate the borrowing and lending markets.
  3. Foreign exchange market risk to increase operational efficiency and risk management

The Digital Personal Data Protection Act, 2023, will bring significant change to the fintech industry in India as it relies on digital transactions and online banking.

Changes to be made in the fintech industry in India under the Digital Personal Data Protection Act, 2023:

  • Enhanced Data Security and Cybersecurity Measures
  • Strengthened Regulatory Framework for Personal Data Protection
  • Promoting Trust and Encouraging Fintech Adoption
  • Increased Transparency in Data Processing and Storage Practices
  • Protection Against Data Breaches and Unauthorised Data Access
  • Legal Backing for Data Transfers and Sharing
  • Promotion of Responsible Data Collection and Processing Practices

Legal framework governing fintech in India: an overview

The legal framework governing fintech in India is a complex one, with various laws and regulations applicable to different aspects of the sector. The primary laws include:

Reserve Bank of India Act, 1934

The Reserve Bank of India (RBI) Act is the principal legislation governing the financial system in India. Under the Act, the RBI is responsible for regulating the banking sector, including non-banking financial companies (NBFCs). Many fintech companies, such as digital lending platforms and payment intermediaries, fall under the regulatory ambit of the RBI.

Payment and Settlement Systems Act, 2007

This Act provides the legal framework for the regulation of payment systems in India. It empowers the RBI to authorise and supervise payment system operators, including fintech companies involved in digital payments.

Companies Act, 2013

The Companies Act of 2013 serves as the cornerstone of corporate governance and regulation for companies in India, encompassing various sectors, including the burgeoning fintech (financial technology) industry. This comprehensive legislation establishes the legal framework and outlines the requirements for the registration, operation, compliance, and disclosure of fintech companies in India.

Key aspects of the Companies Act relevant to fintech companies:

  1. Registration and incorporation:
    • The Companies Act prescribes the process for registering a fintech company in India, outlining the required documentation, procedures, and fees.
    • Fintech companies can choose to incorporate as private limited companies, public limited companies, or limited liability partnerships (LLPs), depending on their specific circumstances and business objectives.
  2. Compliance and reporting:
    • Fintech companies are subject to various compliance requirements, including filing annual financial statements, maintaining statutory records, and complying with regulatory guidelines issued by the Reserve Bank of India (RBI) and other relevant authorities.
    • The Act also prescribes the format and frequency of financial reporting, ensuring transparency and comparability for stakeholders.
  3. Disclosure requirements:
    • Fintech companies are required to make certain disclosures to the public, such as their financial performance, major contracts, related-party transactions, and any material changes in their business operations.
    • These disclosures are intended to provide investors, creditors, and other stakeholders with accurate and timely information to make informed decisions.

Securities and Exchange Board of India (SEBI) Act, 1992

The Securities and Exchange Board of India (SEBI) Act, 1992, is a significant piece of legislation in India that established the Securities and Exchange Board of India (SEBI) as the regulatory authority for the securities market. SEBI’s primary objective is to protect the interests of investors, promote the development of the securities market, and regulate the activities of market participants.

One of the key areas where SEBI plays a crucial role is in regulating fintech companies involved in various activities such as crowdfunding, peer-to-peer lending, and trading in crypto assets.

Information Technology Act, 2000

The Information Technology Act provides the legal framework for electronic transactions, data protection, and cybersecurity in India. It is applicable to fintech companies that collect, process, and store sensitive financial data.

Consumer Protection Act, 2019

The Consumer Protection Act (CPA) serves as a crucial framework to safeguard the rights of consumers, encompassing those who use fintech products and services. The act recognises the rapidly evolving nature of the financial technology industry, ensuring that consumers are adequately protected in their interactions with fintech companies.

Key obligations for fintech companies:

  1. Fair and transparent services:
    • Fintech companies must provide consumers with clear and concise information about their products and services, including terms, conditions, fees, and risks involved.
    • They must avoid deceptive or misleading marketing practices that could potentially harm consumers.
  2. Effective complaint handling:
    • Fintech companies must establish robust and accessible complaint handling mechanisms to address consumer concerns promptly and efficiently.
    • They must ensure that complaints are investigated thoroughly, and appropriate resolutions are provided to consumers in a timely manner.
  3. Consumer privacy protection:
    • Fintech companies are required to implement robust measures to protect consumer privacy and data security.
    • They must obtain informed consent from consumers before collecting, using, or sharing personal information, adhering to strict data protection principles.

Key trends that are expected to shape the fintech industry in India

Here are some of the key trends that are expected to shape the fintech industry in India in the coming years:

  • Increased adoption of mobile banking and digital payments: The number of people using mobile banking and digital payments in India is expected to increase significantly in the coming years. This growth is being driven by factors such as the increasing availability of smartphones and the internet, the government’s push for digital payments, and the increasing number of fintech companies offering mobile banking and digital payment services.
  • Development of new fintech products and services: Fintech companies are constantly developing new products and services to meet the needs of their customers. These products and services include things like mobile banking apps, digital wallets, lending platforms, and insurance platforms.
  • Government support for the fintech industry: The Indian government has been supportive of the fintech industry and has taken a number of steps to promote its growth. These steps include the establishment of a regulatory sandbox for fintech companies, the launch of a fintech innovation fund, and the creation of a fintech working group.
  • Increased competition in the fintech industry: The fintech industry in India is becoming increasingly competitive, with a number of new companies entering the market. This competition is expected to drive down prices and improve the quality of fintech products and services.

The fintech industry in India is expected to play a major role in the country’s economic growth in the coming years. The industry is expected to create jobs, boost financial inclusion, and improve the efficiency of the financial system.


With the evolving fintech industry in India and globally, several new innovations and technological developments are expected in the future. It will increase efficiency and convenience for customers, making there lives easier. India is growing at a very rapid pace in the fintech landscape. It is expected to grow exponentially and reach even the remote villages, giving them opportunities and making their lives easier and better.



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