INDIA Law and Practice Contributed by: Shilpa Mankar Ahluwalia, Himanshu Malhotra and Purva Anand, Shardul Amarchand Mangaldas & Co
Shardul Amarchand Mangaldas & Co. Amarchand Towers, 216 Okhla Phase III Okhla Industrial Estate Phase III New Delhi Delhi 110020 India Tel: +91 11 4060 6060 Email: connect@amsshardul.com Web: www.amsshardul.com
1. Fintech Market 1.1 Evolution of the Fintech Market India is the third largest and the fastest growing fintech market globally. India’s fintech sector has a combined market capitalisation of ~USD120 billion. On the consumer side, Indians are the most open to adopting fintech solutions as evidenced by a fintech adoption rate of 87%, which is sig - nificantly higher than the global average of 64%. India’s investments in digital public infrastructure (DPI) and favourable demographics are the key drivers behind the growth of the Indian fintech sector. The Past 12 Months Over the past 12 months, several key develop - ments have contributed to significant growth in the fintech sector. UPI-linked innovations India’s United Payments Interface (UPI) has enabled seamless, affordable digital payments throughout India, which has been revolutionary for the fintech sector. Over the last year, several
innovative payment products have been devel - oped, building on top of the UPI DPI. Rural Accessibility – UPI 123 Pay and Hello!UPI National Payments Corporation of India (NPCI) has developed products focusing on financial inclusion and accessibility to rural and other underserved areas. These include UPI123Pay and Hello!UPI, which enable instant payments for users with feature phones, with limited or no internet connectivity or through voice-enabled payment instructions in a regional language. Interoperability – PPI on UPI TPAPs By way of a notification dated 27 December 2024, the Reserve Bank of India (RBI) enabled interoperability across prepaid payment instru - ments (PPIs) using UPI. The RBI permitted full- KYC PPIs (see 2.1 Predominant Business Mod- els ) to make and accept interoperable payments through third-party applications (TPAPs). Earlier, transactions with a PPI could only be conducted through the UPI functionality in the PPI issuer’s own app and the customer could not link their PPI wallet to a UPI handle through a TPAP.
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