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Fintech Newsletter: Recent Legal Developments And Market Updates In India – Fin Tech



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INTRODUCTION

The recent developments and updates in the second quarter of
2022 are reflective of a potential remarkable year ahead for the
fintech industry. The quarter has witnessed the introduction and
announcement of several key initiatives and changes by the Reserve
Bank of India (“RBI“), with an aim to
drive digitisation and enhance the outreach for digital payments in
India. Some of the key updates in this sector are (1) introduction
of the “Payments Vision 2025”, – which is a document
setting out the roadmap that the RBI proposes to follow over the
next few years to bolster digital transactions and empower users
with accessible and affordable payment options in India; (2) the
launch of ‘open network digital commerce’, – which is
an initiative to develop open and interoperable infrastructure for
the e-commerce industry in India that is expected to particularly
boost businesses of small merchants; and (3) the consolidation of
the Credit Card and Debit Card – Issuance and Conduct Directions,
2022, – which has set out comprehensive instructions to card
issuers on matters involving the issuance process and safeguards,
telemarketing and strategic partnerships, among others. While some
of these developments have been hailed by the market as a step
forward in the right direction, some of the other measures
introduced during this quarter have also created uncertainties. For
instance, the recent circular issued by RBI on loading of prepaid
payment instruments (“PPIs“) through a
credit line has put the future of several marquee fintech players
in a limbo. Such measures are likely to impact the growth of this
sector which was earlier expected to grow at an estimated rate of
7.5%, this year.

This newsletter highlights these key developments and measures
as well as other developments in the Indian fintech space from
April 01, 2022 to June 30, 2022.

RECENT LEGAL AND REGULATORY DEVELOPMENTS

Indian
Computer Emergency Response Team
(“CERT-In“) directions

On April 28, 2022, CERT-In issued ‘directions relating to
information security practices, procedure, prevention, response and
reporting of cyber incidents for safe & trusted internet’
(“CERT-In Directions“) pursuant to
sub-section (6) of section 70B of the Information Technology Act,
2000. The CERT-In Directions have come into effect from June 27,
2022. This deadline has however been extended to September 25, 2022
for Micro, Small and Medium Enterprises
(”MSMEs”).

The CERT-In Directions have covered different dimensions of
cybersecurity measures and set out very extensive and onerous
compliances and reporting requirements on all service providers,
intermediaries (including financial intermediaries), data centres
and body corporates to whom it is applicable. Some of the key
provisions in the CERT-In Directions are as follows:

  • All entities are required to report any cyber incidents to
    CERT-In within 6 hours of noticing the incident or being brought to
    notice about such incidents.

  • All entities are to mandatorily enable logs of all their
    information and communication technology systems and maintain them
    securely for a rolling period of 180 days and the same must be
    maintained within Indian territorial jurisdiction.

  • Virtual asset service providers, virtual asset exchange
    providers and custodian wallet providers must mandatorily maintain
    all information obtained as part of know your customer
    (“KYC“) checks and records of financial
    transactions, for a period of 5 years.

  • All data centres, virtual private server providers, cloud
    service providers and virtual private network
    (“VPN“) providers are required to
    collect certain information in relation to customer accounts
    including contact numbers, names, etc., and store it for a period
    of 5 years even after the cancellation or withdrawal of such
    subscription.

  • CERT-In has the power to issue orders to entities mandating
    them to take action or provide information that assists CERT-In to
    prevent, pre-empt or address cyber incidents.


Establishment of Digital Banking Units
(“DBUs“)

RBI’s guidelines on establishment of digital banking units
(“DBU Guidelines“) 1 were
issued following the announcement made in the Union Budget 2022-23
for setting up 75 DBUs in 75 districts to commemorate 75 years of
independence of India. The DBU Guidelines seek to promote
digitalisation of existing banks.

A DBU is a specialised fixed point business unit or hub, housing
certain minimum digital infrastructure for delivering digital
banking products and services as well as servicing existing
financial products and services digitally, to enable customers to
have cost effective, convenient access along with an enhanced
digital experience in an efficient, paperless, secured and
connected environment with most services being available in
self-service mode at any time, all year round.2

Scheduled commercial banks with past digital banking experience
in tier 1 to tier 6 centres have been permitted to open DBUs with a
direction to deploy adequate cybersecurity measures and use various
tools and methods to create awareness about digital banking.
Additionally, these banks have been provided an option to engage
digital business facilitators or business correspondents, in
conformance with relevant regulations, to expand the virtual
footprint of DBUs.

It may be relevant to note that as recently as June, 2022, the
RBI governor discouraged the idea of operating and regulating full
stack ‘digital only banks’.3 The RBI governor
stated that there was no proposal currently to regulate neo-banks
as it was felt that existing banks and non-banks could adopt
additional technology for delivering banking services
digitally.4 The DBU Guidelines accordingly are
reflective of the sentiment shared by the RBI governor as the RBI
for the time being aims to aid existing regulated banks offer
better digital services while being disinclined about regulation of
neo-banks.


Credit Card and Debit Card – Issuance and Conduct Directions,
2022 (“Card
Directions
“)

The RBI issued the Card Directions which are applicable to every
scheduled commercial bank (excluding payments banks, state
co-operative banks, and district central co-operative banks) and
all non-banking financial companies
(“NBFCs“) operating in India, effective
from July 1, 2022.5 The Card Directions have been issued
to regulate the conduct of credit and debit payments, and to
provide an elaborate set of instructions to be followed by
card-issuers. The Card Directions have replaced the master circular
on credit card, debit card and rupee denominated co-branded
pre-paid card operations of banks and credit card issuing NBFCs
released in 2015 (“Master Circular of
2015
“).6 The new directions are more
elaborate and have provided more clarity by explicitly providing
the scope of co-branding arrangements and the roles of card-issuers
and co-branding partners.

While most of the conditions have been reinstated from the
Master Circular of 2015, the key distinction between the Card
Directions and the Master Circular of 2015 is that the Card
Directions have also allowed NBFCs to issue credit cards in tie-up
with other banks after obtaining the approval of the RBI.
Additionally, under the Card Directions, a co-branding partner has
been restricted from accessing the customer’s transaction data
and from being involved in any of the processes or the controls
relating to the co-branded card except for being the initial point
of contact in case of grievances.

Draft
guidelines on ‘processing and settlement of small value export
and import related payments’ (“Draft OEIF
Guidelines
“)

As per the extant guidelines on processing and settlement of
export related receipts facilitated by online payment gateways that
were issued by the RBI in November, 2010 (“Existing
Guidelines
“), banks are permitted to offer a facility
of processing and settlement of import and export-related
remittances by entering into standing contracts with online payment
gateway service providers (“OPGSPs“). In
the Draft OEIF Guidelines issued by the RBI, the concept of an
OPGSP has been replaced with that of an online export-import
facilitator (“OEIF“).7 In
this context, several additional responsibilities are proposed to
be placed on an OEIF to reinforce consumer protection. For
instance, an OEIF is required to ensure that the buyer is
compensated and protected from liabilities that may arise from
cross-border imports before the delivery of goods and digital
products. It is also the responsibility of an OEIF to indicate the
exact amount that can be refunded before a purchase is made.
Additionally, an OEIF is accountable for the creation of a reserve
fund for refunds in cases of disputes.

One of the other major changes proposed through the Draft OEIF
Guidelines is an increase in the cap on the transaction limits for
the online import and export of digital goods and products, which
is now proposed to be fixed at USD 3,000 and USD 15,000,
respectively

Overall, the Draft OEIF Guidelines aim to modify the Existing
Guidelines to simplify and rationalise the process for settlement
of payment for export and import through e-commerce, given that
more than 300,000 MSME exporters already rely on OPGSP services to
collect payments.8 The additional compliance burden and
financial risk on the putative OEIFs is something the RBI will need
to navigate with stakeholders

Open
Network for Digital Commerce
(“ONDC“)

ONDC is an initiative launched by the Department for Promotion
of Industry and Internal Trade with the aim of promoting open
networks for all aspects of exchange of goods and services over
digital or electronic networks.

ONDC is an open-sourced methodology which is independent of any
specific platform. The network is based on an open protocol that
will display products and services from all participating
e-commerce platforms on one single network as an aim to democratize
India’s online market. The open protocols would be used for
establishing public digital infrastructure to enable exchange of
information between providers and consumers.

ONDC protocols aim to standardize operations like cataloguing,
inventory management, order management and order fulfilment. Thus,
small businesses will be able to use any ONDC compatible
applications instead of being governed by specific platform centric
policies. Through ONDC, consumers can potentially discover any
seller (small or big), product or service by using any compatible
application or platform, thus increasing the freedom of choice for
consumers. As a result, ONDC would standardize operations, promote
inclusion of local suppliers, drive efficiencies in logistics and
lead to enhancement of value for consumers. However, the
responsibility for onboarding of sellers and buyers and the
management of the end-to-end order lifecycle will continue to
reside with the relevant digital e-commerce applications and
platforms.

All existing digital e-commerce applications and platforms are
free to voluntarily choose to adopt and be a part of the ONDC
network and accordingly, it is not a mandatory direction.


Payments Vision 2025

The RBI released the ‘Payments Vision 2025’, which is a
document that sets out a roadmap outlining the vision of the RBI in
so far as the legal framework is concerned surrounding digital
payments and digital banking in India to increase the number of
digital payment transactions threefold by 2025. The core theme of
the document is “E-Payments for Everyone, Everywhere,
Everytime (4 Es)” with the vision to provide every user with
safe, secure, fast, convenient, accessible, and affordable
e-payment options (6 attributes).

Some of the key initiatives under the Payments Vision 2025
include:

  • Implementing alternative authentication mechanism(s) for
    digital payment transactions in light of increasing instances of
    phishing, vishing and smishing attacks, and the vulnerabilities of
    one-time password-based authentication to such attacks;

  • Implementing a real or near real time reporting of payments
    fraud and operationalising an integrated system called the Central
    Payments Fraud Information Registry wherein all stakeholders can
    share information and initiate necessary corrective action to
    prevent frauds;

  • Given the emerging geo-political risks, exploring the
    possibility of mandating domestic processing of payment
    transactions by the payment system operators;

  • Intention to undertake a comprehensive review of different
    types of PPIs including the definition of closed-system PPIs and
    related aspects;

  • Regulation of bigtechs and fintechs in the payments space to be
    explored and a discussion paper to be published;

  • Evaluation of charges for all payment systems such as switching
    fee, interchange fee which are incurred while undertaking digital
    payments services, to ensure that such charges do not deter digital
    payments adoption;

  • A framework on internet of things device payments covering
    aspects of data security, authentication, identity validation, etc.
    is intended to be introduced;

  • Linking credit cards and credit components of banking products
    to unified payments interface
    (“UPI“);

  • Contemplating the issuance of guidelines on payments involving
    ‘buy now pay later’ (“BNPL“)
    services;

  • Undertake a comprehensive review of Review of Payment and
    Settlement Systems Act and regulations keeping in view the dynamic
    nature of the payment ecosystem;

  • Expansion of inter-operability to contactless transit card
    payments in offline mode;

  • Expanding the global footprint of domestic payments systems
    like UPI by collaborating with relevant stakeholders. Furthermore,
    the feasibility of expanding real time gross settlement to settle
    transactions in major trade currencies such as USD, Pound, Euro,
    etc. is intended to be explored through bi-lateral or multi-lateral
    agreements;

  • To facilitate cross-border remittances using national
    electronic funds transfer, and remittance facilities as the one
    undertaken in the Indo-Nepal Remittance Facility Scheme is intended
    to be extended to other countries; and

  • Constitution of a Payments Advisory Council with experts with a
    legal background along with those with expertise in payments
    technology and banking as well as representation from consumer
    groups, fintechs and start-ups, data analysts etc.

Framework for
authorization in financial technologies on International Financial
Services Centres (”IFSCs”)
9

The International Financial Services Central Authority
(“IFSCA“) issued a framework for
authorisation in financial technologies on IFSCs on April 27, 2022
(“IFSC Framework“) with a view to
develop and regulate financial products, financial services and
financial institutions in IFSCs and to encourage promotion of
fintech across the spectrum of banking, insurance, securities, and
fund management in IFSCs. It also aims to facilitate Indian
fintechs seeking access to foreign markets and foreign fintechs
seeking entry into India.

Through the IFSC Framework, IFSCA has invited applications for
fintech Regulatory Sandbox and will accordingly grant limited use
authorisation to the eligible fintech entities. This would enable
them to apply and avail grants under the IFSCA Fintech Incentive
Scheme 2022. The IFSC Framework also incorporates the inter
operable regulatory sandbox mechanism, which is a proposed
mechanism to facilitate testing of innovative hybrid financial
products or services falling within the regulatory ambit of more
than one financial sector regulator.

Accordingly, the IFSC Framework aims to serve as a unified
regulator for banking, capital markets, insurance and funds
management in IFSC, and accordingly enable fintech firms having
innovative ideas or solutions across the banking, capital or
insurance sector to have seamless interaction with a single
regulator


Modifications to the Payments Infrastructure Development Fund
(“PIDF“) Scheme

The PIDF Scheme was operationalised by the RBI from January 01,
2021 and is being modified by enhancing the subsidy amount and
simplifying the subsidy claim process for the deployment of points
of sale (“PoS“) infrastructure (physical
and digital modes) in tier-1 to tier-6 centres and north-eastern
states of the country.10

INDUSTRY CHALLENGES

Impact
of the CERT-In directions

On April 28, 2022, CERT-In issued the CERT-In Directions with a
view to implement better cybersecurity measures and put in place
various checks and balances to prevent any cyber security incidents
and breaches. While the CERT-In Directions have been issued keeping
in mind the very purpose for which CERT-In was set up, which is to
take all proactive measures for prevention of cyber incidents and
breaches in India with the end purpose of ensuring the safety of
internet in India, CERT-In has left several stakeholders in a limbo
and disappointed with the imposition of onerous directions.
Further, given that the CERT-In Directions were prepared and issued
without any prior public consultation or inputs from other
stakeholders, the directions have not been well received and have
caused quite a stir within the industry. The CERT-In directions
have attracted a fair share of criticism for being too harsh,
vague, having unrealistic timelines and for imposing heavy
compliance requirements. These requirements have been termed as
cumbersome and have made it difficult for companies to do business
in India. ExpressVPN, Surf Shark and NordVPN have already removed
their servers from the country. VPN providers have claimed that the
new laws are overreaching and broad in its ambit and open the
window for potential abuse and put users’ data at
risk.11 Following this, multiple associations and groups
have reached out to CERT-In claiming that the directions are likely
to have a significant adverse impact on organisations that operate
in India. It will be interesting to see how the implementation of
these directions play out and if and when CERT-In would revisit and
reconsider some of the directions imposed and the practical
challenges that the industry is likely to suffer as a result of the
same.

Issuance of RBI Notification disallowing non-banks from
loading of PPIs from credit lines

On June 20, 2022, the RBI issued a circular to non-bank PPI
issuers (“Circular“), clarifying that
the master direction on PPIs dated August 27, 2021
(“PPI-MD“) does not permit loading of
PPIs from credit lines. As per the Circular, all non-banks have
been directed by RBI to immediately stop all practices which do not
comply with the above. Any non-compliance in this regard may
attract penal actions under the Payment and Settlement Systems Act,
2017. The RBI by making reference to para 7.5 of the PPI-MD
reiterated that “PPIs shall be permitted to
loaded/reloaded by cash, debit to a bank account, credit and debit
cards, PPIs (as permitted from time to time) and other payment
instruments issued by regulated entities in India, and it shall be
in INR only
“.

The Circular has had a major impact on several fintech players
that currently issue PPIs funded through a credit line provided by
a bank or an NBFC. It also impacts fintech players that operate a
BNPL model, where credit is typically sourced from banks/NBFCs that
the fintech partners are associated with. The Payments Council of
India and several fintech players have made representations to the
RBI urging that full-KYC verified PPIs be treated at par with bank
accounts. Fintech industry associations have also sought an
extension of six months to comply with the RBI mandate.

The Circular is being seen by many as an attempt by the RBI to
get the end user to directly connect with the partner banks for
availing loans.12 However, until further clarifications
are issued regarding this, impacted fintech players can only
continue to resort to pre-emptive measures with a view to reduce
risk to the extent possible.

Securities and Exchange Board of India
(“
SEBI”) cautions investors against dealing with
unregulated platforms offering algorithmic trading

SEBI through a press release dated June 10, 2022, urged
investors to exercise caution when dealing with unregulated
platforms that are offering investors algorithmic trading
services/facilities to automate their trade. Since there is no
investor grievance redressal mechanism covering the activities of
these platforms, SEBI has advised investors against sharing any
sensitive personal data on such platforms.13

Enforcement Directorate (“ED”) has
frozen accounts of more than one hundred fintech firms

The ED, Hyderabad, recently shared a list of nearly one hundred
fintech firms with payments gateways whose bank accounts have been
blocked. It has been reported that this move was a result of
connections these fintech firms have with persons based out of the
People’s Republic of China. This action was taken after reports
surfaced about illicit transactions and issuance of loans to
Indians at a steep rate during the pandemic by Chinese nationals
through certain indigenous fintech firms. It was also reported that
many Chinese firms were able to freely invest in Indian companies
by registering the businesses in discreet jurisdictions such as the
Cayman Islands, through which they were able to hide their actual
identity from the Indian government.14

RECENT MARKET UPDATES

RBI announces its proposal to link credit cards with
UPI

The RBI announced in the ‘statement on developmental and
regulatory policies’ released after the Monetary Policy
Committee meeting that it will allow linking of credit cards with
UPI. Until now, only debit cards were allowed to be linked with
UPI. This announcement by RBI is expected to result in an increase
in credit card transactions. The RBI further announced that it will
start the facility with only Rupay credit cards. This move has been
welcomed by industry participants given the ground reality, where
most Indian merchants do not ordinarily offer credit card PoS
terminals but do accept payments through UPI QR codes. However, a
larger impact will be seen once this facility is extended to Visa
and Mastercard as well.15

RBI directs banks to provide the option of Interoperable
Card-less Cash Withdrawal (“
ICCW”) at Automated
Teller Machines (“ATMs“)

The RBI has urged all banks, ATM networks and white label ATM
operators to provide the option of ICCW at their ATMs. The National
Payments Corporation of India has been advised to facilitate UPI
integration with all banks and ATM networks, for UPI to be used for
customer authorisation in these transactions, while settlement
would be through the National Financial Switch/ ATM networks.
Withdrawal limits for ICCW transactions would be in line with the
regular on-us/off-us ATM withdrawals. The on-us/off-us ATM
withdrawal will be processed without levy of any charges other than
what is prescribed under the circular on interchange fee and
customer charges dated June 10, 2021.16

Central Government to launch Digital India Start-up
Hub

The Central Government is working with the State Governments to
roll out the Digital India Startup Hub, an initiative meant to
serve as a ‘national enabler’ for startups all over the
country. The intention is to facilitate face-time engagements
between startups and the government ecosystem on a monthly or a
quarterly basis to enable more exchange of information and ideas
between the government, big tech companies and
startups.17

MAJOR DEALS IN INDIA

Recur Club, a business-to-business financing
startup, raised USD 30 million in its seed funding round led by
IndoEdge Ventures and Bill Gates and Jeff Bezos backed Village
Global. Aditya Birla Finance, Urgo Capital, Titan Capital, and
Incred Financial Services also participated in this round. The
startup will use the funding to ramp up hiring across key verticals
and to facilitate expansion in India and other regions. The capital
will also be used to invest in technology, to strengthen its
artificial intelligence and machine learning-powered underwriting
software to gauge prospective clients better, and to scale up the
venture.18

Hubble, a fintech startup that provides its
users with a rewards-based savings model, has raised USD 3.5
million as a part of its seed funding round led by Sequoia Capital
India. Kunal Bahl, the co-founder of Snapdeal and Sateesh Andra,
managing partner of Endiya Partners also participated in this
round. The startup plans to use the funds to build a decentralised
savings infrastructure to power its consumer-facing applications
and bring Indian and global brands onto it.19

StrideOne, a tech enabled NBFC startup
incorporated by founders of Stride Ventures raised USD 32 million
(INR 250 Crores) through a mix of equity and debt, in its seed
funding round. The equity round was led by Elevar Equity, whereas
the debt funding round saw participation from various Indian banks.
The funds raised will be used to create financial products for
fulfilling the credit and non-credit requirements of MSMEs and
startups.1 20

NAKAD, a supply-chain finance startup which
provides working capital credit to small and medium enterprise
suppliers of corporate vendors, raised USD 7 million in its seed
funding round. The round was led by Accel and Matrix Partners and
saw participation from AdvantEdge Founders as well. The funds will
be utilized to boost hiring, build a world-class product, and scale
up operations in India. The round also saw participation from
founders of Razorpay and chief executive officers of Uni Cards,
Zolve and Five Star Business Finance as well, among
others.21

Multipl, a fintech startup has raised USD 3
million in its pre-series A round of funding. Kotak Securities
Limited, along with Blume Ventures, GrowX Ventures, and India
Infoline participated in this round. The firm encourages its users
to save money on short term goals and is working on a ‘plan now
save smarter’ model, which is a save now, buy later initiative
for its users.22

Digit Insurance, an insurtech startup plans on
raising about USD 500 million through its initial public offering
(“IPO“). The insurtech unicorn is backed
by Virat Kohli and marquee investors such as Sequoia Capital, A91
Partners, Faering Capital and billionaire Prem Watsa’s Fairfax
Group, and is looking at a valuation of USD 4.5 billion to USD 5
billion in the IPO. Once listed, Digit will join Policybazaar as
the second Indian insurtech unicorn to go public.23

Slice, a fintech unicorn, has raised USD 50
million in a series C round led by Tiger Global, through
investments by existing investors Moore Strategic Ventures and
Insight Partners, and a new investor GMO VenturePartners. This has
now brought the valuation of the firm to over USD 1.5 billion. The
firm seeks to use this capital to support the expansion of its new
UPI product. UPI payments would aid the firm in expanding its
customer base, which fintechs often leverage to cross-sell other
offerings.24

CRED, a fintech unicorn has raised USD 140
million as part of its series F funding round led by
Singapore-based sovereign wealth fund GIC. Existing investors such
as Sofina, Tiger Global, FalconEdge, and Dragoneer also invested in
the funding round.25

EnKash, a spends management platform and
corporate cards company has raised USD 20 million as a part of its
Series B round that was led by Ascent Capital with participation
from Baring India and Singapore-based White Ventures. The round
also saw participation from existing investors, Mayfield India and
Axilor Ventures. The funds will be used to roll out new offerings
around banking-as-a-service and scale up EnKash’s ‘plug and
play’ cards issuance stack. The funds will also be used to
expand EnKash’s geographical presence on the international
front.2

HostBooks, an Indian fintech startup focused on
MSMEs has raised USD 3 million in a series A round led by RazorPay.
The funds would be utilized by the firm to add to its product
suite, develop new products that support its order management,
neo-banking, advanced inventory & production management, and
AI-based business decision making tools.26

PhonePe, a payments platform, aims to raise
funds through an IPO for broadening its financial services
portfolio and deepening its core UPI based payment operations. The
firm plans to seek a valuation of USD 8 billion to USD 10 billion
and plans to go public once its core business turns profitable,
which it hopes to achieve by next year. PhonePe’s Board has
also ratified its proposal to move the holding company entity from
Singapore to India, highlighting its ‘Made in India’
credentials.27

FlexiLoans, a Small and Medium Enterprises
(“SME“) lending platform has raised USD
90 million in its series B funding round. Investors such as
Denmark-based MAJ Invest, UK-based Fasanara Capital, the family
offices of Harry Banga and Yogesh Mahansaria participated in this
round. The startup plans to utilise the funds for platform building
and cushion lending approaches. The funds will also be used to
shore up capital deployment in the SME sector and expand its user
base.28

Stashfin, a neo-banking platform has raised USD
270 million via a mix of USD 200 million as equity and USD 70
million as debt as a part of its series C funding round. The round
was led by Uncorrelated Ventures, Fansara Capital, and Abstract
Venture, and saw participation from existing investors including
Altara Ventures, Kravis Investment Partners and Snow Leopard.
Following the fundraise, the startup is now valued between USD 700
million and USD 800 million. These funds will be used to expand
Stanfish’s footprint across Southeast Asia and South Asia, and
also to ramp up its technology for new products.29

Turtlemint, an insurtech platform has raised
USD 120 million in a series E round led by Amansa Capital, Jungle
Ventures and Nexus Venture Partners. The round also saw
participation from SCI Investments, Vitruvian Partners and Marshall
Wace. The company intends to use the fresh funds to expand in new
geographies, scale its leadership team and strengthen its product
stack.3 30

Pine Labs, a merchant commerce platform, has
acquired application programming interface fintech startup Setu for
USD 70 million to USD 75 million. Setu offers an interface for
account aggregators, open network for digital commerce and open
credit enablement network frame. Setu is being seen as a remarkable
addition for PineLabs as the embedded finance market’s value is
expected to exceed USD 138 billion by 2026.4
31

Kissht, a fintech startup has raised USD 80
million in a funding round led by Vertex Growth and Brunei
Investment Agency. Vertex Ventures SEA Indian, Venture East,
Sistema Asia and Endiya Partners also participated in this round.
The startup intends to use the funds to issue BNPL cards named
Ring, which users can utilise to avail a line of credit for up to
INR 30,000, pay for e-commerce transactions, and pay to merchants,
self, and friends. Kissht plans to issue Ring in association with
NBFC partners RBL and SBM Bank.5 32

Kinara Capital, an MSME lending startup, raised
USD 50 million capital in the latest round of investment from
Nuveen and Triple Jump. This investment will help Kinara expand its
products and services to meet the rapidly rising MSME credit demand
in India.6

Pine Labs, a payments solution provider, raised
USD 20 million from the State Bank of India. The company proposes
to use these funds in scaling Plural (its newly launched brand of
online payment products) and aims to become an omnichannel partner
of choice for merchants.33

Footnotes

1. Reserve Bank of India – Notifications
(rbi.org.in)

2.
https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12285&Mode=0

3.
https://economictimes.indiatimes.com/tech/technology/rbi-shoots-down-proposal-on-digital-only-banks/articleshow/92278787.cms

4.
https://economictimes.indiatimes.com/tech/technology/rbi-shoots-down-proposal-on-digital-only-banks/articleshow/92278787.cms

5. Reserve Bank of India – Master Directions
(rbi.org.in)

6.
https://www.rbi.org.in/Scripts/BS_ViewMasCirculardetails.aspx?id=9838

7. Reserve Bank of India – Database
(rbi.org.in)

8.
https://economictimes.indiatimes.com/small-biz/trade/exports/insights/for-over-3-lakh-service-exporters-rbis-draft-oeif-guidelines-a-shot-in-the-arm-for-the-gig-economy/articleshow/92219996.cms

9. International Financial Services Centres Authority
(ifsca.gov.in)

10. Reserve Bank of India – Press Releases
(rbi.org.in)

11.
https://www.livemint.com/news/india/indias-new-vpn-rules-spark-fresh-fears-over-online-privacy-11654128391351.html

12.
https://inc42.com/features/will-rbis-circular-for-non-bank-ppis-serve-a-death-blow-to-some-star-fintechs/

13.
https://www.sebi.gov.in/media/press-releases/jun-2022/caution-to-investors-against-dealing-with-unregulated-platforms-offering-algorithmic-trading_59672.html

14.
https://inc42.com/buzz/ed-asks-payment-gateways-to-freeze-bank-accounts-of-100-fintech-firms/

15.
https://rbi.org.in/scripts/PublicationReportDetails.aspx?ID=1202;
https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=53833;
https://inc42.com/buzz/will-linkage-with-upi-turn-out-to-be-a-game-changer-for-credit-cards/

16.
https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12321&Mode=0

17.
https://inc42.com/buzz/india-to-launch-digital-india-startup-hub-to-connect-startups-with-govt-ecosystem-rajeev-chandrasekhar/

18.
https://inc42.com/buzz/in-one-of-the-biggest-seed-funding-rounds-in-india-recur-club-bags-30-mn-from-infoedge-ventures/

19.
https://economictimes.indiatimes.com/tech/funding/fintech-startup-hubble-bags-3-5-million-funding-from-sequoia-capital-india-others/articleshow/90844642.cms

20.
https://inc42.com/buzz/stride-ventures-financial-platform-strideone-raises-inr-250-cr-to-offer-bespoke-credit-solutions/

21.
https://www.apnnews.com/nakad-a-supply-chain-fintech-for-indian-msmes-raises-7m-in-seed-funding/

22.
https://www.news18.com/news/business/kotak-securities-announces-investment-in-fintech-startup-multipl-all-you-need-to-know-5166571.html

23.
https://inc42.com/buzz/virat-kohli-backed-insurtech-unicorn-digit-insurance-500-mn-ipo/

24.
https://www.livemint.com/news/india/fintech-unicorn-slice-raises-50-million-in-funding-led-by-tiger-global-11654090351053.html
;
https://www.moneycontrol.com/news/business/startup/slice-rolls-out-upi-on-its-platform-for-larger-payments-play-8533561.html

25.
https://inc42.com/buzz/gic-leads-creds-140-mn-series-f-funding-round-valuation-surges-to-6-4-bn/

26.
https://inc42.com/buzz/razorpay-leads-series-a-funding-in-fintech-startup-hostbooks/

27.
https://www.livemint.com/news/india/walmartbacked-phonepe-prepping-for-ipo-seeks-valuation-of-8-10-bn-11655290776091.html

28.
https://inc42.com/buzz/sme-lending-platform-flexiloans-raises-90-mn-in-debt-equity-to-shore-up-user-base/

29.
https://inc42.com/buzz/fintech-startup-stashfin-raises-270-mn-to-expand-footprint-across-south-asia-sea/

30.
https://www.businesstoday.in/entrepreneurship/news/story/turtlemint-raises-120-million-valuation-jumps-to-950-million-331816-2022-04-29

31.
https://www.livemint.com/companies/news/its-official-pine-labs-buys-setu-for-70-75-mn-11655973796127.html

32.
https://inc42.com/buzz/fintech-kissht-raises-80-mn-in-a-bid-to-enter-bnpl-cards-market/

33.
https://inc42.com/buzz/zomato-board-approves-acquisition-of-blinkit-for-inr-4447-cr/

1. IndusLaw advised Elevar Equity in this
transaction.

2. IndusLaw advised EnKash in this
transaction.

3. IndusLaw advised Nexus Venture Partners and SCI
Investments in this transaction.

4. IndusLaw advised Pine Labs in this
transaction

5. IndusLaw advised Vertex Growth, Brunei Investment
Agency, Vertex Ventures SEA India, Endiya Partners, Venture East
and Sistema Asia in this transaction.

6. IndusLaw advised Kinara Capital in this
transaction.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.



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