Focus Area
Fintech & NBFCs
Fintech companies and non-banking financial companies (NBFCs) are regulated mainly by the Reserve Bank of India. A company that carries on lending or similar financial business generally needs a certificate of registration from the Reserve Bank, and payment businesses need authorisation under the Payment and Settlement Systems Act, 2007. The Firm advises these businesses on regulation, data, and the agreements that underpin them.
What the law requires
- Licensing: an NBFC must be registered under the Reserve Bank of India Act, 1934 and meets minimum capital and governance standards. Payment aggregators and gateways are authorised under the Reserve Bank's directions.
- Digital lending: the Reserve Bank has issued directions on how loans are originated, disclosed and disbursed through apps and lending partners.
- Data and security: the Digital Personal Data Protection Act, 2023 and sector rules on storage and security.
- Partnerships: agreements between regulated entities and technology platforms, which must respect what the regulated entity may not outsource.
Scope of Work
- Reserve Bank of India regulatory compliance
- licensing and investment
- data privacy and cyber security
- payment aggregators and payment gateways
- partnership and platform agreements
- disputes and recovery
Questions and Answers
- Does a lending app need an NBFC licence?
- A business that lends from its own balance sheet generally must be an NBFC or partner with a regulated lender. A pure technology platform that only connects borrowers to a regulated lender is treated differently, but the structure must be reviewed.
- Who regulates payment aggregators?
- The Reserve Bank, through authorisation under the Payment and Settlement Systems Act, 2007 and its directions.
- What are the main data duties?
- Obtaining valid consent, limiting use to the stated purpose, securing data, and following the Reserve Bank's data storage requirements for payment data.
- Can a lender recover a defaulted loan outside the court system?
- Banks and many NBFCs can use the SARFAESI Act, 2002 to enforce security without going to court, and may also use insolvency proceedings or civil suits.
Related Reading
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