Financial technology and payments
Payment aggregators, digital lenders, prepaid instrument issuers and account aggregators hold RBI authorisations that carry continuing conditions, and enforcement in this space typically begins with an inspection finding.
Reviewed
What this covers
- Payment aggregator and payment gateway licensing
- Digital lending compliance and default loss guarantee arrangements
- Account aggregator framework compliance
- NBFC licensing and RBI regulatory compliance
- UPI and NPCI governance and dispute resolution
- Prepaid payment instrument regulatory compliance
- Cross-border fintech investment and FEMA compliance
- Defence of RBI inspection and show-cause proceedings
The notes behind these capabilities
The Reserve Bank of India (Authentication mechanisms for digital payment transactions) Directions, 2025, issued on 25 September 2025, required every payment system provider and participant, bank or non-bank, to comply by 1 April 2026. A domestic digital payment needs at least two distinct factors of authentication unless it is exempted, and at least one of them must be dynamic unless the card is physically used at the point of transaction. Card issuers had until 1 October 2026 to put in place a mechanism to validate non-recurring overseas card not present payments where the overseas merchant or acquirer asks for authentication, and a risk-based mechanism for all of them. Where a loss arises from a transaction effected without complying, the issuer compensates the customer in full.
The Reserve Bank of India (Digital Lending) Directions, 2025 took three circulars written over five years and replaced them with one, and in doing so moved the default loss guarantee out of a standalone 2023 circular and into a chapter of the regime it always belonged to. The commercial terms are unchanged in substance: cover is capped at five per cent of what the portfolio disbursed, it is held in cash or in something a lender can realise like cash, and the lender invokes it within 120 days of a loan going overdue. What changed is the frame. A guarantee is now read against the same instrument that fixes the key fact statement, the cooling off right, the fee route and the directory filing, so an arrangement that is sound on the five per cent and wrong on the fees fails in one document rather than two.
Reference
Regulators in this sector
Forums
Practice areas that apply
- Boardroom and corporate
- Transaction advisory
- Capital markets
- Banking, SARFAESI and DRT
- Insolvency
- Civil disputes
- PMLA
- Technology, data and product
- Taxation and fiscal
- White-collar and cyber defence
- AI, data and emerging technology
- Cyber crime
- Money recovery
- Foreign exchange (FEMA)
- Prevention of sexual harassment (POSH)
- GST disputes
Advocates in this sector
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