FM Nirmala Sitharaman Meets Fintech Startups, Underlines Need For Compliance

During a meeting with homegrown fintech startups, finance minister (FM) Nirmala Sitharaman on Monday (February 26) underscored the need for them to comply with norms and protect consumer interest.

The meeting with representatives from fintech startups was aimed at addressing various bottlenecks and discussing issues facing the sector. 

Sources told Inc42 that the meeting was attended by senior officials, including a Reserve Bank of India (RBI) deputy governor, secretaries of various departments, and ministries such as finance, DPIIT and MeitY.

From the fintech ecosystem, Pine Labs’ Amrish Rau, CRED’s Kunal Shah, Jitendra Gupta of Jupiter and Policybazaar’s Yashish Dahiya were among the attendees. Heads of banks such as the State Bank of India, Union Bank of India, Canara Bank were also present during the meeting. 

Representatives from PhonePe, Google Pay, Razorpay and top officials of the NPCI also reportedly attended the meeting.

As per the report, FM Sitharaman suggested that the RBI should hold monthly meetings with fintech startups to address any potential pain points of the sector. As per the report, the meeting centred on concerns related to Know Your Customer (KYC) compliance and focusing on cyber security to protect digital financial systems.

Sources said that the issue of “dual listing of foreign equities of fintech companies” was also discussed during the meeting. As many as 40 startups were said to have attended the meeting. They sought more clarification on foreign direct investment (FDI) in the sector.

Meanwhile, fintech founders took to X, formerly Twitter, to speak about the meeting and welcomed the deliberations between the sector and the centre.

“Remarkable bias for action and initiative shown by policymakers with diverse responsibilities who came together for positive engagement with fintech startups. Grateful to the finance ministry and RBI for the frank exchange, encouragement, and belief in the role fintechs play in enabling India’s economic and social ambitions,” said CRED founder Shah.

Chiming in, Capitalminds founder and chief executive officer (CEO) Deepak Shenoy said, “Incredible meeting with the Finance Minister and DFS, RBI, DPIIT and MEITY alongside the stalwarts in fintech on the road ahead for India. Mind blown by the energy and the strong intent and calls to action. The openness to feedback and the push to make things better is, frankly, remarkable. Very impressed and motivated!”

The meeting comes in the backdrop of the RBI’s crackdown on the fintech juggernaut Paytm’s payments bank. Following the RBI’s action on Paytm Payments Bank, a clutch of Indian fintech founders had written a letter to top government leaders terming the central bank’s order “harsh”.

The RBI has issued a number of orders over the last year or so to better regulate the fintech space. However, some of these orders have created fintech startups, some of whom have even been forced to change their business models. The meeting was being seen as a step by the Centre to allay the fears of the stakeholders of the fintech ecosystem. 

Curiously, the report said that there were no expressions of anxiety or concerns related to Paytm Payments Bank by the startup founders during the meeting. 

Overall, fintech continues to be one of the biggest sectors within the Indian startup ecosystem. Despite the ongoing funding winter, some of the fintech startups have raised big-ticket rounds over the past two years. 

As per Inc42 data, more than 726 Indian fintech startups raised more than $28 Bn between 2014 and 2023. Last year alone, four fintechs – PhonePe, DMIFinance, Perfios and InsuranceDekho – raised capital in excess of $100 Mn each.