Fintech 2026

INDIA Law and Practice Contributed by: Shilpa Mankar Ahluwalia, Purva Anand and Ansh Jain, Shardul Amarchand Mangaldas & Co

• development of in-house technology, using internal analytical information to provide robo-advisory, putting them in competition with new and upcom - ing specialised start-ups. 3.3 Issues Relating to Best Execution of Customer Trades The robo-advisory landscape in India is still evolv - ing. A focus area has been to solve network crea - tion and connectivity issues between the clients and robo-adviser platforms, which may affect the speed of execution. Further, it is critical that the nuances of the material and procedural aspects of investments in various assets through a robo-advisory platform are covered by the internal policies of the robo-adviser entities. This is especially important from the perspective of new or first-time investors operating through a robo- advisory platform. 4. Online Lenders 4.1 Differences in the Business or Regulation of Fiat Currency Loans Provided to Different Entities The lending regulations in India are broadly borrower agnostic. However, the extent of regulatory supervi - sion differs depending on the category of lender. Both banks and NBFCs are required to comply with specific capital adequacy, asset quality and prudential norms. While banks are generally heavily regulated, NBFCs are subject to relatively less stringent regula - tion. Lending service providers or digital lending appli - cations are front-end entities and are only indirectly governed by the DL Guidelines. From a business perspective, banks primarily extend secured credit to large entities that pose a lower credit risk and have substantial credit history and business operations. A significant proportion of fintech lend - ers are licensed as NBFCs – which typically cater to MSMEs and start-ups, which may be unable to demonstrate the same degree of credit strength and operations as large corporations. In the retail/individ - ual borrower space, traditional forms of credit such

as home loans/mortgage-backed loans are offered by banks, and more unique products, including smaller ticket, salary/cashflow-backed loans are largely the domain of NBFCs/fintech players. The RBI has also issued a designated regulatory framework for P2P lenders – ie, entities that do not lend on their own books but offer loan facilitation ser - vices between lenders registered on the platform and prospective borrowers. Furthermore, the Indian financial sector also often sees lending partnerships between banks and NBF - Cs, whereby the bank brings the advantage of capital, while the NBFC partner assists with the customer dis - tribution channels and technological aspects. 4.2 Underwriting Processes Traditionally, as a market practice, industry partici - pants have been relying on the following key param - eters for credit underwriting processes: • credit score and credit reports from CICs; • annual income and sources of income; and • status of existing loan accounts, including any delayed repayments, defaults, etc. Non-traditional behavioural data is increasingly being used for credit analysis (see 2.13 Conjunction of Unregulated and Regulated Products and Servic- es ). Technology platforms that already have access to some of this behavioural data have taken the lead in the development of these alternative credit scoring models. The DL Guidelines mandate that REs undertake responsible lending by capturing the economic profile of the borrowing (including age, occupation, income, etc) to assess the borrower’s creditworthiness in an auditable way. To this end, the DL Guidelines permit collecting data that is required in connection with its operations, provided the digital service provider/RE is able to demonstrate a tangible and direct link between the borrower data collected and economic profiling of the borrower enabling credit decision-making. The RBI also dictates detailed regulatory requirements and procedures to be followed for undertaking KYC

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