Government steps up oversight of India's fintech sector

The Reserve Bank of India (RBI) has introduced a Self-Regulatory Organisation (SRO) Framework for the FinTech Sector, which came into effect on 30 May 2024.

The Government of India has said it is continuously reviewing the country's fintech ecosystem and strengthening regulations to improve consumer protection, enhance cybersecurity and promote responsible innovation in digital financial services. In a written reply in the Lok Sabha, Minister of State for Finance Pankaj Chaudhary outlined several measures introduced in collaboration with financial regulators and other stakeholders to oversee digital lending platforms, payment aggregators and other fintech services.

RBI strengthens regulation and industry oversight

The Reserve Bank of India (RBI) has introduced a Self-Regulatory Organisation (SRO) Framework for the FinTech Sector, which came into effect on 30 May 2024. The framework is intended to encourage responsible business practices by establishing industry standards, promoting ethical conduct, improving transparency, resolving disputes and strengthening accountability among fintech companies.

The RBI has also continued to support innovation through its Regulatory Sandbox, introduced in 2019, allowing new financial products and services to be tested in a controlled regulatory environment before wider deployment.

Focus on payment security and data protection

To strengthen digital payment security, the RBI issued Master Directions on Digital Payment Security Controls, requiring banks to implement minimum cybersecurity standards across internet banking, mobile banking and card payment systems.

The National Payments Corporation of India (NPCI) has also deployed an Artificial Intelligence (AI) and Machine Learning (ML)-based fraud monitoring system for Unified Payments Interface (UPI) transactions. The system helps banks detect suspicious activity, generate alerts and block potentially fraudulent transactions.

The government added that the Digital Personal Data Protection Act, 2023, along with the Digital Personal Data Protection Rules, 2025, provides a legal framework for protecting individuals' personal data in the digital economy.

Public encouraged to report cyber fraud

To help citizens report cybercrime and illegal digital lending activities, the Ministry of Home Affairs operates the National Cybercrime Reporting Portal and the 1930 Cybercrime Helpline. The government said consumers can also report illegal deposit-taking and unauthorised financial entities through the SACHET portal, while State Level Coordination Committees (SLCCs) assist in addressing complaints related to unlawful financial activities.

In addition, the RBI and banks regularly conduct awareness campaigns through SMS messages, radio broadcasts and public outreach programmes. The RBI also runs electronic Banking Awareness and Training (eBAAT) initiatives to educate consumers about online fraud, cyber risks and safe digital banking practices. The government said it will continue engaging with regulators and industry stakeholders to review developments in the fintech sector and introduce measures that support innovation while safeguarding consumers.