MARKET UPDATES AND RECENT LEGAL DEVELOPMENTS IN INDIA - August 01, 2020 - October 15, 2020
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MARKET UPDATES
AND RECENT LEGAL
DEVELOPMENTS IN INDIA
August 01, 2020 - October 15, 2020
Authors: Avimukt Dar | Suneeth Katarki | Namita Viswanath | Shreya Suri
Shobhika Upadhyay | Nilima Pant | Siddharth Dalmia
01 of 08
INTRODUCTION
The Indian fintech space has been undergoing a radical insurance companies. In the first six months of 2020,
transformation. According to the EY Global Fintech fintech startups have raised USD 1.7 billion compared
Adoption Index, India has the highest fintech adoption to USD 726.6 million during the same period in 2019,
rate of 87%, which is significantly higher than the global according to reports.3 The Indian fintech industry is
average of 64%. In fact, the Indian digital payment also witnessing the increased application of artificial
industry is expected to touch USD 10.07 trillion by 2026.1 intelligence and big data for enhancing personalized
With a view to building a ‘cash-free’ economy, the policy- offerings. New business models like Neobanks are
makers are aiming towards uninterrupted availability of expected to revolutionize the Indian fintech market.4
safe, secure, and affordable e-payment systems.2
This newsletter highlights the key developments in the
Despite the recent economic slowdown in India with the Indian fintech space from August 1, 2020 to October 15,
extended lock-down, the fintech industry has continued 2020.
to attract investments, with Covid-19 having fast-tracked
adoption of digital solutions by consumers, banks, and
1. https://www.financialexpress.com/economy/digital-payment-volumes-set-to-grow-at-20-per-annum-report/1690554/
2. https://bfsi.eletsonline.com/a-new-era-of-fintech-with-customer-engagement/
3. https://www.businessinsider.in/business/startups/news/india-fintech-startups-beat-global-slowdown-funds-raised-doubled-in-the-first-half-
of-2020/articleshow/77903612.cms;https://www.bloombergquint.com/business/startup-street-covid-19-fails-to-dampen-fintech-investments-
in-india
4. https://www.prnewswire.com/news-releases/indias-fintech-market-2020-2025-expected-to-grow-at-a-cagr-of-22-7-despite-covid-19-
disruptions-301067857.html
02 of 08
MARKET UPDATES AND MAJOR DEALS IN INDIA
Niyo, a digital banking fintech startup, acquired different UPI apps. With mpay.me users will be able to
Goalwise, a new-age mutual funds investment platform, generate their own mini personal payment gateways
to expand its product offerings and cater to increased using their phone numbers and share it with anyone over
demand for digital banking and related services.5 chats, SMS to collect payments.11
Paytm attained a 50 percent share in the payments to Facebook is aiming to consolidate all its payments
merchants (P2M) segment in India and emerged as one initiatives and projects under a single group, ‘Facebook
of the most integrated payments provider in the fintech Financial,’ which will be led by David Marcus, the co-
space with its strong presence in tier III with over 16 creator of its Libra cryptocurrency project. This new
million merchants on its platform.6 To further empower group is proposed to pursue and oversee payments and
small and medium-scale enterprises, Paytm recently commerce initiatives of Facebook, including Facebook
launched a portable Android Point-of-Sale (“POS”) Pay, WhatsApp Pay, and Novi (a digital wallet to hold the
device for contactless ordering and accepting payments Libra cryptocurrency).12 In particular, this initiative includes
on the go. The device is styled like a mobile phone and launching WhatsApp Pay in India and Brazil amidst
comes bundled with Paytm’s QR code scanner as well regulatory concerns in the respective jurisdictions. The
as the ‘Paytm for Business’ app.7 Separately, Paytm also formation of Facebook Financial indicates Facebook’s
launched stock trading services on their investment effort to bring its individual products and applications
and wealth management platform, ‘Paytm Money.’ closer together, similar to the growing integration of
With this launch, Paytm aims to drive financial inclusion Facebook, Messenger, Instagram, and WhatsApp.13
and facilitate stock penetration in equities trading
by removing information gaps and making investing OKEx, a cryptocurrency and derivatives exchange,
convenient and affordable for its users.8 Separately, launched a peer-to-peer trading platform in India,
Paytm has also launched its own ‘Android Mini App allowing Indian users to buy digital currencies in
Store’ for Indian developers to build new innovative Indian rupees (“INR”) with zero transaction fees. It
products and services for the masses and has announced is a marketplace for traders to make fiat – to – crypto
an INR 10 crore fund in this regard.9 This development is transactions via escrow and enable various payment
in line with the Indian government’s interest in launching methods, including UPI, NEFT, and IMPS, through the
its own mobile app store or expanding an existing one platform.14
if it receives enough demand from domestic firms to
compete with Apple and Google platforms.10 Google Pay launched its near-field communication
(NFC) technology in India, which enables users to add
Mobikwik launched its Unified Payments Interface credit cards and debit cards as contactless payment
(“UPI”) payment link service ‘mpay.me,’ to enable the methods for some users, for direct payments.15
sending and receiving of money between two users on
5. https://www.cnbctv18.com/startup/niyo-acquires-wealth-tech-startup-goalwise-to-expand-offerings-in-mutual-fund-segment-6471381.htm
6. https://www.indiatvnews.com/business/news-paytm-grabs-50-per-cent-share-in-merchant-payments-space-paytm-payments-bank-phone-
pe-google-pay-644430
7. https://blog.paytm.com/introducing-indias-first-pocket-android-pos-device-for-contactless-ordering-payments-81d8edbe2384
8. https://blog.paytm.com/introducing-stock-broking-services-on-paytm-money-app-637090282122
9. https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/paytm-announces-rs-10-crore-fund-for-mini-app-developers-on-paytm-
mini-app-store/articleshow/78549465.cms
10. https://www.thedailystar.net/bytes/news/india-open-launching-own-app-store-start-ups-criticise-google-govt-source-1972589
11. https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/mobikwik-launches-personal-upi payment-link-mpay-me/
articleshow/77257536.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
12. https://tech.economictimes.indiatimes.com/news/internet/ettech-top-5-softbanks-turnaround-facebooks-new-financial-unit-more/77487571;
https://www.bloomberg.com/news/articles/2020-08-10/facebook-financial-formed-to-pursue-company-s-commerce-ambitions
13. https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/facebook-financial-formed-to-pursue-companys-payments-plans/
articleshow/77476176.cms; https://medium.com/fast-company/inside-facebooks-quadruple-play-how-the-company-is-finally-melding-its-
apps-a2835c808e50
14. https://cointelegraph.com/news/okex-launches-indian-p2p-trading-platform-despite-legal-uncertainty; https://www.okex.com/academy/en/
okex-launches-peer-to-peer-trading-platform-with-multiple-payment-methods-in-india/
15. https://www.indiatoday.in/technology/news/story/google-pay-rolls-out-nfc-based-contactless-card-payment-option-in-
india-1716946-2020-08-3103 of 08
Innoviti recently partnered with Visa to develop a iServeU Technologies, which has developed a payment
platform to enable card issuers to extend credit and infrastructure enabling small village merchants to serve
installment options to their cardholders at POS terminals local communities. The iServeU platform reportedly
in India. Through a single Application Programming processes transactions worth USD 500 million annually,
Interface (“API”) based integration between Innoviti’s with this activity having further risen during the Covid-19
uniPAY Next platform and Visa’s APIs, the platform pandemic. This collaboration aims to give Niyogin
aims to help merchants leverage cardholders’ existing access to rural India, and the investment is expected to
relationships with financial institutions for installment be used for new product innovation and to jointly serve
solutions.16 rural customers and micro-businesses.20
Rapipay, a fintech firm and subsidiary of Capital India Amazon has recently added new products to its
Finance, announced that it is planning to install 500,000 fintech offerings in India, including insurance and gold
micro-ATMs across the country in the next 2 years to serve investment products, in order to expand their customer
the needs of those who do not have access to digital baseand attract more subscribers to the Prime Loyalty
financial services or are unable to use them effectively.17 Program.21
Binance, a global blockchain company, has launched Separately, in order to make digital payments seamless
the ‘Build for Bharat’ initiative. The program is based across various segments (such as mobile recharge,
around blockchain datasets, blockchain-AI solutions, insurance premium, electricity bills, etc.), Amazon has
mini-tokens, micro-financing products, and other launched a credit card bill payment feature on its digital
decentralised financing products, and startups with payments application, ‘Amazon Pay,’ that allows users to
blockchain-based innovative use cases are eligible to complete their bill payment seamlessly through UPI and
participate in this initiative.18 internet banking.22
Eduvanz, a fintech non-banking financial company Additionally, Amazon Pay partnered with Uber to
(“NBFC”) that provides education financing through integrate its payment option on the Uber application
its tie-ups with different institutes, raised USD 5 million enabling customers to make payments for their Uber
in a Series-A round, led by Sequoia Capital India and rides using Amazon Pay. Amazon India had earlier also
participation from existing investor, Unitus Ventures. partnered with the Indian Railway Catering and Tourism
The investment is proposed to be used for geographical Corporation (IRCTC) for enabling users to make railway
expansion to Tier-II and III cities in India, the creation ticket bookings on its platform using Amazon Pay.23
of new credit products, an AI-based risk management
system, and to improve collection efficiencies and Cashaa, a London-based online banking platform, is
lending cycle management.19 planning to launch a crypto-friendly neobank in India,
which would allow Indian businesses and individuals
In a cash and stock deal worth approximately USD to open a savings account and buy, store and save
8 million, Niyogin acquired a 51% strategic stake in cryptocurrencies, along with crypto-asset based
lending.24
16. https://innoviti.com/press-release/innoviti_partners_with_visa_to_develop_installments_platform_for_face-to-face_transactions; https://
www.retailbankerinternational.com/news/innoviti-partners-visa-to-facilitate-credit-access-at-face-to-face-pos/
17. https://www.crowdfundinsider.com/2020/09/166481-indian-fintech-rapipay-to-install-500000-micro-atms-in-the-country-as-its-not-ready-to-
give-up-cash-and-switch-to-digital-payments/
18. https://yourstory.com/2020/08/binance-build-for-bharat-defi-blockchain-fund-fintech
19. https://tech.economictimes.indiatimes.com/news/startups/eduvanz-raises-5-million-in-series-a-financing-led-by-sequoia-india/77515375;
https://www.vccircle.com/sequoia-leads-series-a-funding-round-for-education-loan-startup-eduvanz/
20. https://www.livemint.com/companies/news/niyogin-acquires-51-stake-in-iservu-for-inr-592-million-11598881652429.html
21. https://www.reuters.com/article/us-amazon-com-india-payments/amazons-new-offerings-make-india-centre-of-fintech-push-idUSKBN25T0JL
22. https://www.pymnts.com/amazon/2020/amazon-india-introduces-credit-card-bill-payments/
23. https://www.moneycontrol.com/news/business/amazon-pay-partners-with-uber-india-joins-google-pay-paytm-5953531.html; https://
www.hindustantimes.com/business-news/amazon-india-irctc-partnership-how-to-book-train-tickets-on-e-commerce-platform/story-
JEtIVpASV6QrRXSolkdW1K.html
24. https://cointelegraph.com/news/british-fintech-to-expand-banking-services-to-indian-crypto-customers04 of 08
Razorpay raised USD 100 million in a Series-D funding funding round led by DSP Group along with existing
round led by GIC along with participation from other investors Sequoia Capital India, Blume Ventures,
investors, Sequoia Capital, Ribbit Capital, Tiger Global Beenext, and WEH Ventures. SCI Investments V, Arkam
Management, Y-Combinator, and Matrix Partners. With Ventures, Utpal Sheth, and Kunal Shah (Cred) also
this fundraise, Razorpay has attained unicorn status with participated in this round. The funding is proposed to
a valuation of over USD 1 billion. The funding is proposed be used to enhance the platform’s infrastructure stack,
to be used by Razorpay to accelerate its product lines, add investment products and partners to the platform,
including payments and neobanking, and hire more and to expand the product and technology teams.28
employees.25 IndusLaw advised SCI Investments V on this transaction.
Groww, an online investment platform, raised USD 30 Unocoin, a cryptocurrency trading platform, raised
million in a Series-C round, led by YC Continuity, and approximately USD 3.6 million out of a USD 5 million
participation from existing investors, Sequoia India, Ribbit Series-A funding round, led by Draper Associates,
Capital, and Propel Ventures. The funding is proposed along with participation from XBTO Ventures and 2020
to be used to strengthen its technology infrastructure, Ventures. The funding is expected to help the company
expand its product suite, and fuel its pan-India financial grow its platform in India and enable it to further develop
education initiative ‘Ab India Karega Invest.’26 its technology team and product offerings (including
services around DeFi).29
Acko Technology and Services, a digital insurance
startup, raised USD 60 million in its latest Series-D funding The National Payment Corporation of India (“NPCI”),
round, led by Munich Re Ventures, with participation with the objective of further streamlining the digital
from existing investors Amazon, RPS Ventures, and Intact payments space in India, has launched the functionality
Ventures. This funding is proposed to be used to scale of ‘UPI AutoPay’ for recurring payments. This new
its technology and data teams, branding, accelerate feature can be used by customers and merchants to
growth in existing lines, and invest in expansion into new enable recurring payments using any UPI application
product lines.27 such as mobile bills, electricity bills, EMI payments,
entertainment/OTT subscriptions, insurance, mutual
Smallcase Technologies, an online investment platform funds, loan payments, etc. of up to INR 2000. Customers
for individual investors to invest in curated baskets of will now also have an option to create, approve, modify,
stocks and ETFs, raised USD 14 million in a Series-B pause, and revoke any auto-debit mandates.30
25. https://razorpay.com/blog/razorpay-secures-100-million-in-series-d-funding/; https://www.techcircle.in/2020/10/12/razorpay-scoops-up-100-
mn-in-growth-funding-round-report; https://yourstory.com/2020/10/funding-alert-razorpay-unicorn-100-million-series-d-sequoia-gic
26. https://groww.in/blog/groww-raises-series-c-round-to-accelerate-democratising-investing-in-india/
27. https://www.techcircle.in/2020/09/16/amazon-backed-acko-secures-60-mn-growth-round-at-nearly-500-mn-valuation;
28. https://www.livemint.com/companies/start-ups/smallcase-raises-14-million-from-dsp-group-others-11601273289089.html;
29. https://www.coindesk.com/tim-draper-leads-targeted-5m-series-a-for-india-crypto-exchange-unocoin\
30. https://www.npci.org.in/sites/default/files/NPCI_Press_Release-NPCI_introduces_AutoPay_facility_on_UPI_for_recurring_payments.pdf05 of 08
RECENT LEGAL DEVELOPMENTS
RBI Governor’s Statement having innovative solutions have also been permitted
to tie-up with authorised PSOs. Although authorized
The Governor of Reserve Bank of India (“RBI”) on
PSOs are permitted to offer certain services, approval of
October 09, 2020,31 announced various measures to
RBI must be taken for any additional services that are
aid India’s economic revival in the current Covid-19
proposed to be offered by the PSO. PSOs are required
pandemic, including certain measures to deepen
only to inform the RBI of the detailed specifications of
financial inclusion and facilitate ease of doing business by
payment solutions they propose to offer under the pilot
upgrading payment system services. Some key measures
scheme, and they may launch operations without waiting
announced impacting the fintech sector include:
for RBI’s approval.
(a) Round-the-clock availability of the RTGS System:
The Pilot Scheme has been allowed for small value
In order to facilitate swift and seamless real-time
payment transactions of up to INR 200 without requiring
payments, the RBI has made the Real-Time Gross
any Additional Factor of Authentication (“AFA”), with
Settlement (RTGS) system available round-the-clock
the overall limit on any instrument capped at INR 2,000
on all days (i.e., 24x7x365) with effect from December
at any point of time (that can be reset using online mode
2020. This follows RBI’s earlier announcement in
with AFA). The payment solutions are further required
December 2019 wherein it made the National
to have in-built features such as transaction alerts,
Electronic Funds Transfer (NEFT) system available
adherence to EMV standards, and provisions of limiting
round-the-clock on all days as well.
customers’ liability34 in order to safeguard the interest
(b) Perpetual validity for Certificate of Authorisation of users.
issued to PSOs: In order to obviate licensing
The Pilot Scheme will be conducted for a limited period
business uncertainty for Payment System Operators
up until March 31, 2021, after which the RBI will decide
(“PSOs”) as well as reduce compliance costs, attract
on formalizing such a system depending on the results of
investment and encourage the development of
the Pilot Scheme.
new technologies, the RBI has decided to grant
authorization for all PSOs (new applicants as well as
existing PSOs) on a perpetual basis, subject to certain RBI introduces an online dispute resolution
conditions, as compared to 5 years period currently
system for digital payments
prescribed under the Payment and Settlement Pursuant to its ‘Payment and Settlement Systems in India:
Systems Act, 2007. Vision – 2019-2021’,35 the RBI has advised authorised
PSOs and their participating members, i.e., Payment
Pilot Scheme for offline retail payments System Participants (“PSPs”), to put in place systems for
online dispute resolution (“ODR”) for resolving disputes
With the objective of encouraging technological
and grievances of customers through one or more
innovations that enable offline digital transactions, the
channels (for instance, a complaint form, IVR, mobile
RBI has permitted a pilot scheme (“Pilot Scheme”)
application used for making payments, call centre, SMS,
through its notification dated August 06, 2020.32 Pursuant
branches, etc.). To begin with, the RBI has directed PSOs
to the Pilot Scheme, the authorised PSOs (the entities
– banks and non-banks, to implement the ODR system
authorized by the RBI pursuant to section 4 of the
for disputes and grievances related to failed transactions
Payment and Settlement Systems Act, 2007)33 – banks
in their respective payment systems by January 01, 2021
and non-banks – may offer solutions to enable digital
and to provide access to such an ODR system to the
payments to be made offline (i.e., not requiring internet
PSPs.36 Thereafter, based on the feedback, the ODR
connectivity to take effect) using cards, wallets, or mobile
system is likely to be extended to cover other disputes
devices for remote or proximity payments. Other entities
and grievances as well.
31. https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/GS09102038283EFDBB8B4C70B56D8FB919F15E9B.PDF
32. https://rbidocs.rbi.org.in/rdocs/notification/PDFs/NOTI22E337913692C04560A953EEC75CCF099C.PDF
33. Pursuant to Section 4 of the PSSA, operators of payment systems must be authorised by the RBI. The list of PSOs authorised by the RBI can
be viewed at https://www.rbi.org.in/scripts/publicationsview.aspx?id=12043
34. These provisions are for the protection of the customer and in some cases, the payment solution provider. The RBI notifications governing
the same are: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11446&Mode=0 and https://www.rbi.org.in/Scripts/NotificationUser.
aspx?Id=11040&Mode=0
35. https://www.rbi.org.in/Scripts/PublicationVisionDocuments.aspx?Id=921
36. https://rbidocs.rbi.org.in/rdocs/notification/PDFs/21ODR602F0A579EB246AA885776A76122DB0C.PDF06 of 08
The ODR system would need to be simple, transparent, enforcing minimum benchmarks, industry standards,
rule-based, technology and system-driven, and unbiased and best practices in the payment space with respect to
for resolving any customer disputes and grievances, with system security, pricing practices, customer protection,
zero or minimal manual intervention. Further, the ODR competitiveness, and grievance redressal mechanisms,
system should require minimum details from customers, which would supplement but not replace applicable laws
ensure data confidentiality, and provide for complaint and regulations.41
status tracking.
Authorisation of a new Pan-India Umbrella Entity Niti Aayog’s proposed architecture for data
for Retail Payment empowerment and protection
Niti Aayog recently released a draft document for
The RBI issued a press release on August 18, 2020, with
discussion and comments, titled ‘Data Empowerment
the final framework for the authorisation of a new pan-
and Protection Architecture’ (“DEPA”),42 set to launch
India umbrella entity for retail payments (“NUE”).37 The
in 2020. Through the DEPA, Niti Aayog has proposed
RBI has invited applications for setting up/ recognition
a secure consent-based data-sharing framework to
of the NUE till February 26, 2021, which would primarily
accelerate financial inclusion, with an individual-centric
be responsible for setting up, managing, and operating
approach that promotes user control on data sharing for
new payment system(s) in the retail space, including
empowerment. The DEPA seeks to replace costly and
ATMs, White Label PoS, Aadhaar based payments, and
cumbersome data access and sharing practices currently
remittance services.38 The framework seeks to set up
prevalent by providing for a seamless exchange of
an alternative to the NPCI in response to the emerging
personal data with third-party institutions such as banks
issues of concentration of risk. IndusLaw has published a
and non-banking financial institutions through private
detailed analysis along with comments on the Framework
‘consent manager institutions,’ that will allow individuals
in August 2020.39
to provide consent for every piece of data shared through
an API framework.
RBI proposes a framework for recognition of
a Self-Regulatory Organisation for payment
system operators Consent manager institutions will be put in place for
different sectors, and they will serve as conduits between
The RBI, on August 18, 2020, published a draft
data principals, data fiduciaries (holding the individual’s
framework40 (“Draft SRO Framework”) for recognition
data), and businesses that seek access to personal data
of a Self-Regulatory Organisation (“SRO”) for PSOs,
(potential data users). The proposal is for the DEPA
for stakeholder comments. The Draft SRO Framework
framework to first go live first in the financial sector. In
comes in the backdrop of substantial growth in the
this regard, the RBI has already introduced the concept
digital payments ecosystem in India and the need
of consent managers for the financial sector through
to have an industry association as an SRO for helping
the framework for account aggregators released in
orderly and disciplined behaviour by members of the
November 2019.43
payment ecosystem.
The DEPA framework is not proposed as a static policy
The SRO is proposed to be a non-governmental and or infrastructure, but as an evolving program which aims
not-for-profit organisation and is expected to be a two- to structure the evolution of data policy by building
way communication link between the PSOs and the RBI. a dynamic technology foundation based on shared
It will also be required to work towards framing and standards.44
37. https://rbidocs.rbi.org.in/rdocs/notification/PDFs/FRAMEWORKCC3A86B01E974EB3BDD6930ED922B31C.PDF
38. https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/PR206BF44FACCFC1741C0BE3CB24C0655AC60.PDF
39. https://induslaw.com/app/webroot/publications/pdf/alerts-2020/Infolex-News-Alert-RBI-Umbrella-Entity-for-Retail-Payment.pdf
40. https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/PR20728B58D1E0D2644099B3220A4854AFB9C.PDF
41. https://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/PR1891415105FB93F94FCEB44EC8E8C219DBF0.PDF
42. https://niti.gov.in/sites/default/files/2020-09/DEPA-Book_0.pdf
43. https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=11729&Mode=0
44. https://www.thequint.com/tech-and-auto/depa-data-empowerment-and-protection-architecture-niti-aayog-personal-data-sharing07 of 08
MEITY proposes policy on artificial intelligence and supervisory functions, as well as for its role as the
operator of payment systems, citing that the personal
The Ministry of Electronics and Information Technology
data collected by RBI is incidental to its functions and
(“MEITY”) has proposed a policy on artificial intelligence
not for deriving any commercial gain. Taking account of
(“AI”) to launch AI and ML-based programs to address
international norms, such as that in the United Kingdom,
various issues faced by people, such as language barriers,
Europe, and Malaysia, it has also been reported that
with a proposed rollout for over 22 regional languages,
the RBI does not want financial data of individuals to be
as per reports, for which Cabinet approval is pending.45
classified as sensitive personal data under the upcoming
personal data protection law, as it may have a negative
IRDAI allows video-based KYC
impact on India’s efforts for financial inclusion. The RBI
IRDAI, in order to simplify the process of Know Your has reportedly also raised concerns and inconsistencies
Customer (KYC), has permitted insurers (or persons between rules framed by it and the upcoming personal
appropriately authorized by them) to use “Video-Based data protection law with respect to the data storage
Identification Process (VBIP)” as an alternative electronic period and cross-border transfer of financial data.48
process of Identification/KYC in paperless form by
undertaking seamless, secure, real-time, consent-based Writ Petition on the moratorium on EMI payments
audio-visual interaction with the customer/beneficiary
The writ petition49 filed before the Supreme Court of
to obtain identification information required for the
India (“Supreme Court”) by Gajendra Sharma, relating
purpose of client due diligence.46
to the moratorium granted by the RBI for a total period
of 6 (six) months from March 01, 2020 to August 31, 202050
Launch of Fintech Association for Consumer
(the “Moratorium Period”) on payment of installments
Empowerment
in respect of all term loans outstanding as on March 01,
A group of fintech companies have come together 2020, is currently pending before the Supreme Court.
and formed a not-for-profit industry body, the Fintech
Association for Consumer Empowerment (“FACE”), In compliance with the Supreme Court’s order dated
officially launched on October 01, 2020. FACE has been September 10, 2020,51 the Indian government informed
formed to support the Indian government’s vision to the Supreme Court through its additional affidavit dated
accelerate financial inclusion and meet the increasing October 02, 2020 (the “Affidavit”) that it has agreed to
credit demand from consumers. FACE aims to regularly provide relief to certain categories of small ticket loans
engage with industry policy stakeholders, including of up to INR 2 crore, including MSME and personal loans,
the RBI, Ministry of Finance, Niti Aayog, and other by waiving the compound interest for these loans during
government authorities, to present consumer views the Moratorium Period.
and observations for a more effective policy framework,
Through its order dated October 05, 202052, the Supreme
higher-quality consumer engagement, and consumer
Court took note of objections raised against the Affidavit
empowerment through digital lending.47
by various petitioners and has directed different banks
and the Indian Bank Association to bring on record
RBI seeks exemption from the new data
relevant policy decisions and guidelines consequent to
protection framework
this and to implement the decisions of the RBI and the
It has been reported that the RBI has sought exemption Indian government. On October 14, 2020, the Supreme
from the purview of the impending personal data Court partly heard arguments of different parties, and
protection law in India for its monetary, regulatory, this matter has now been listed for hearing on November
02, 2020.
45. https://economictimes.indiatimes.com/news/economy/policy/ministry-of-electronics-and-it-seeks-cabinet-approval-for-policy-on-ai-based-
programmes/articleshow/78464775.cms
46. https://www.financialexpress.com/money/insurance/irdai-permits-insurers-to-use-video-based-kyc-for-onboarding-customers/2070856/
47. businesswireindia.com/top-fintech-leaders-announces-ambition-to-empower-consumer-finance-with-the-launch-of-fintech-association-for-
consumer-empowerment-face-69823.html; https://faceofindia.org/aboutus.htm/
48. hindustantimes.com/india-news/rbi-seeks-exemption-from-data-protection-law/story-kwQzNs614s0C56VK6HTCJP.html
49. Writ Petition with Diary No. 11127. 2020 before the Supreme Court
50. https://m.rbi.org.in/scripts/BS_CircularIndexDisplay.aspx?Id=11835; https://rbidocs.rbi.org.in/rdocs/notification/PDFs/
NT2455D86E6F80D9D4BC29C0DFAA43D76D9A4.PDF
51. https://main.sci.gov.in/supremecourt/2020/11127/11127_2020_36_1_23895_Order_10-Sep-2020.pdf
52. https://main.sci.gov.in/supremecourt/2020/11127/11127_2020_34_1_24234_Order_05-Oct-2020.pdf08 of 08
INDUSTRY CHALLENGES
Concerns with respect to Google Playstore 26(2) of the Competition Act, 2002, vide its order dated
PayTm android application was temporarily delisted August 18, 2020.58
from the Google Play Store on September 18, 2020.
India’s Ban on Apps Amid Security Concerns59
Paytm had recently launched the ‘Paytm Cricket League’
campaign where users could collect cricket stickers and Following on its earlier press release of June 29, 2020,
scratch cards to earn cashback, and Google believed this by which the MEITY had disallowed the usage of 59
feature to be a violation of its gambling policies.53 Paytm applications, the MEITY has now further issued a press
removed its cashback campaign from its application to release on September 2, 2020 disallowing the usage of
have its application re-listed on the Google Play Store 118 more mobile applications (the “Apps”), including
on the same day.54 However, Paytm reportedly reinstated fintech applications such as Alipay. This decision again
its cashback feature later with certain changes.55 On a appears to have been based on the apprehension that
similar note, PayTm’s gaming app, ‘Paytm First Games’ these Apps are engaged in activities that are prejudicial
was also pulled down by Google from Google Play Store to India’s sovereignty, integrity, defense, security, and
for alleging violating their gambling policies.56 Paytm public order.
First Games accused Google of exhibiting dangerous Similar to the earlier banned applications, MEITY has
and extra-judicial monopolistic powers in interpreting invoked its power under section 69A of the Information
policies for commercial benefits and disbarring apps. Technology Act, 2000 read with the Information
Paytm First Games application was, however, restored on Technology (Procedures and Safeguards for Blocking of
Google Play Store after it tweaked some requirements to Access of Information by Public) Rules, 2009 to disallow
fit Google Play Store’s policy.57 the usage of these Apps.
It has also been reported that the Indian government is
CCI dismisses case against WhatsApp Pay
now scanning several fintech app-based lenders that are
A petition was filed in the Competition Commission of Chinese origin for any data or privacy breaches with
of India (“CCI”), alleging the bundling of Whatsapp’s respect to sensitive financial data of users in India.60
payment option (WhatsApp Pay) within the messaging
application (WhatsApp) and thereby using its dominant SC issues notice to Central Government,
position in the internet-based instant messaging WhatsApp, Google, RBI, Amazon over data
application space to penetrate into the UPI enabled security concerns in UPI transactions
digital payments application space.
Rajya Sabha member, Binoy Viswam, filed a petition in
In this context, the CCI reasoned that the installation of the Supreme Court alleging misuse of data collected
WhatsApp messenger is voluntary, and the application through UPI based systems. The petition has also
does not place any compulsion (explicit or implicit) on questioned the manner in which RBI and the NPCI
its users to necessarily use WhatsApp Pay. The CCI also are allowing payment services through WhatsApp,
recognized that the UPI digital payments market already Google, and Amazon despite alleged violations of UPI
consists of various established players such as Google guidelines. The court’s intervention has been sought to
Pay, PayTM, PhonePe, Amazon Pay, etc. and that the ensure that the data collected through the apps of these
complaint was premature considering that WhatsApp companies is used only for financial transactions and not
Pay is currently only in the beta testing stage, which is in contravention of privacy and data protection norms.
limited to serving less than 1% of the total users of the The Supreme Court has issued notices to the Central
WhatsApp application. Accordingly, CCI did not find any Government, WhatsApp, RBI, Google, and Amazon in
merit in the matter and dismissed the case under Section the matter. 61 62
53. https://www.livemint.com/companies/news/paytm-is-back-on-play-store-hours-after-google-removes-the-app-11600436391822.html
54. https://www.cnbc.com/2020/09/22/india-paytm-says-googles-monopoly-over-android-is-a-concern-for-all-local-start-ups.html
55. https://www.livemint.com/companies/news/a-week-post-google-s-temporary-ban-paytm-brings-back-ipl-led-cashback-
scheme-11601295368050.html
56. https://www.cnbctv18.com/technology/paytm-and-paytm-games-pulled-down-from-google-playstore-for-alleged-violation-of-gambling-
policies-6949391.htm
57. https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/paytm-first-games-relisted-on-google-play-store-after-weeks/
articleshow/78545386.cms
58. https://www.cci.gov.in/sites/default/files/15-of-2020.pdf?download=1
59. https://pib.gov.in/PressReleasePage.aspx?PRID=1650669
60. https://www.livemint.com/companies/news/govt-lens-on-fintech-cos-with-china-links-11600733213636.html
61. Writ Petition(s)(Civil) No(s). 1038/2020
62. https://www.medianama.com/2020/09/223-binoy-viswam-petition-supreme-court-protecting-upi-data/; https://www.cnbctv18.com/
entrepreneurship/startup-digest-top-startup-stories-of-the-day-11-7212461.htmwww.induslaw.com
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