The Indian fintech space has grown into one of the world’s largest ecosystems, bringing numerous innovations that have made payments and financial services accessible to millions. 

However, these advancements have also come with considerable challenges. Internet and card-based banking frauds quadrupled in FY24, according to an annual report from the Reserve Bank of India (RBI).

The RBI’s supervisory returns reveal a staggering 29,082 instances of credit/debit card and internet-based fraud in the financial year 2023-2024—an alarming 334% increase compared to the previous fiscal year, which reported 6,699 such instances. Clearly, measures to address these issues were urgently needed.

Regulatory crackdowns and their impact

In January, Paytm Payments Bank faced significant regulatory action when it was barred from onboarding new customers and forced to halt all banking services due to non-compliance with Know Your Customer (KYC) norms. 

The move had a dramatic impact on Paytm’s stock, which plummeted immediately and bottomed out at nearly Rs 317 per share over the following months.

“It created great urgency among fintech players to get their systems in line,” said a fintech investor on the condition of anonymity. “It was a reminder that compliance is non-negotiable, no matter how big you are or how many customers will be affected.”

The RBI’s directive also forced Paytm Payments Bank to cease onboarding new UPI customers and freeze key payment services, significantly impacting its market position. However, in October, the company received approval from the National Payments Corporation of India to resume UPI registrations, regaining a crucial growth lever.

Since then, Paytm has made a full recovery from January’s regulatory setbacks. Its shares, on December 27, were trading at over Rs 990 per share, erasing the losses triggered by the RBI’s sanctions earlier this year. 

Peer-to-peer lending under scrutiny

Paytm was not the only company to face regulatory action. The RBI revised its framework for non-banking financial companies facilitating peer-to-peer lending (NBFC-P2P) to curb malpractice and enhance transparency in the sector.

The updated regulations prohibit NBFC-P2Ps from assuming any credit risk, either directly or indirectly. Previously, platforms were not allowed to provide credit enhancement or guarantees, but the revised guidelines go further, ensuring that lenders bear the full risk of principal and interest loss.

Startups like LenDenClub and IndiaP2P quickly adapted to the new regulations by introducing updated features and processes. However, other players have struggled to adjust. Cred and BharatPe, for example, have put all new P2P investments on hold.

Investors, too, have felt the impact. MobiKwik Xtra, a P2P lending service managed by NBFC-P2P Lendbox, previously promised anytime withdrawals. However, following the RBI’s crackdown, Lendbox halted all secondary sales, forcing some investors to wait until 2026 to access their funds.

“This year has been nothing short of transformative for the P2P lending industry,” said Bhavin Patel, Founder & CEO, LenDenClub.

“Regulatory reforms like these are crucial—they may seem challenging in the short term, but they pave the way for long-term innovation and growth. These changes are a win for everyone—platforms, lenders, and borrowers. However, a few of the points are truly restrictive and discouraging innovation,” Patel added.

Lending practices under fire

In October, the RBI took action against DMI Finance and Navi Finserv due to concerns over their pricing policies. Sources indicate that Navi’s interest rates, which were as high as 35%, were a key point of contention.

Many digital lenders criticised the move, questioning why NBFCs were being targeted while credit card companies charging similar or higher interest rates were left untouched. They argued that interest rates and fees are already required to be fully disclosed to customers under an RBI mandate issued in February.

The RBI lifted restrictions on Navi Finserv earlier this month, allowing the NBFC to resume loan sanctioning and disbursal activities.

“In the evolving regulatory environment, it will be important for fintechs to balance innovation, put in place robust risk management strategies and adhere to regulatory guidelines, thereby helping customers build trust in digital financial solutions,” said Akshay Mehrotra, Co-founder & CEO, Fibe, a fintech firm.

Self-governance

While some critics argue that RBI’s approach is too heavy handed, it has also paved the way for more self-governance.

In May 2024, the RBI introduced a framework for establishing self-regulatory organisations in the fintech sector. The initiative aims to balance innovation with safeguards for customer protection, data privacy, and cyber security while promoting self-governance among fintech entities. 

Self-regulatory organisations are envisioned to set industry standards, ensure compliance with laws, and act as neutral bodies to resolve disputes within the fintech community. By fostering a culture of accountability and collaboration, the framework encourages fintech firms to voluntarily align with ethical and operational best practices.

On August 28, the RBI announced that the Fintech Association for Consumer Empowerment had been recognised as the first self-regulating organisation in the Indian fintech sector.

“This growth [of the fintech sector] is bolstered by various regulatory initiatives, with the Fintech self-regulatory organisation playing a pivotal role in shaping the sector. It will promote a culture of collaboration between the regulator and industry players and help improve self-regulation and compliance within the industry,” said Mehrotra.

“Besides, it will further create a more transparent ecosystem, ensuring consumer protection. As we move forward, three pillars—self-regulation, risk management, and customer education—will remain central to building a more inclusive, resilient, and innovative digital financial ecosystem.”

Hello,

As the year draws to a close, caution is key for the government.

India’s economy is expected to grow at around 6.5% in fiscal year 2024-25, closer to the lower end of its 6.5% to 7% projection, as global uncertainties pose a dampening threat, according to the finance ministry’s monthly economic report. 

With a widened trade deficit and the rupee clocking at a new all-time low, the RBI has its work cut out to maintain its envisioned economic trajectory for next year.

As India weathers yet another slew of volatile headwinds, political and industry leaders alike came together to reminisce and pay homage to the late Manmohan Singh, who steered the economy out of the 2008 recession and freed it from restrictive licence raj-era policies to pave the way for what is now Asia’s third largest economy. 

Dignitaries from the Dalai Lama to the former Prime Minister’s contemporaries and foreign counterparts offered condolences and shared memories of the man often dubbed the “reluctant PM”, after his surprise ascension to the seat in 2004. 

But then again, as he once put it, history is often kinder than the contemporary lens.

ICYMI: A look back at some of the policies that shaped the future of a billion Indians. 

In other news, NASA pulled an Icarus move this week, but unlike the tragic figure from Greek mythology, its probe lived to tell the tale after flying too close to the sun.

The agency confirmed on Friday that its Parker Solar Probe was safe and operating normally after passing just 3.8 million miles from the solar surface and enduring temperatures of up to 1,800 degrees Fahrenheit, in the closest-ever approach to the Sun by any human-made object.

All in a day’s work of unravelling the mysteries of the cosmos!

In today’s newsletter, we will talk about 

• A year of social impact movements
• AI, blockchain shape 2024’s tech policies
• Highlighting Bihar’s investor appeal

Here’s your trivia for today: Military leader Napoleon also dabbled in writing what genre of book?

Social Impact

A year of social impact movements

As 2024 draws to a close, the social sector has been a testament to the power of resilience, innovation, and community-driven change. 

From groundbreaking initiatives addressing gender inequality, grassroots movements for climate action, people who have created a defining social impact to social enterprises that have embraced tech for good, this year has showcased how individuals and organisations have believed in action for impact. SocialStory looks at a few stories that sparked conversations and inspired action this year. 

Call to action:

• As a trans model, Rudrani Chettri saw the lack of opportunities for other trans and non-binary models and decided to start Bold, a transgender modelling agency, which has now also expanded to include casting opportunities for the trans community as well. Today, Bold has over 50 models on its roster. 
• Some stories revolve around preserving traditions and livelihoods, like Asha Patil and Seema Kishore’s Banjara Kasuti, which aims to give Lambani women a platform for their traditional craft. The Lambanis are a traditional nomadic community from the Mewar region, now a part of modern-day Rajasthan. 
• Occasionally, the smallest of changes can bring about a big impact. Indian Administrative Service officer Sushant Gaurav has empowered more than 30,000 farmers in the district to grow ragi (finger millet), which can withstand dry spells and has high nutritional value, instead of paddy, as part of a sustainable agricultural movement. 

Policy

AI, blockchain shape 2024’s tech policies

India took bold strides in 2024 with a series of transformative tech policies aimed at accelerating innovation and economic growth. By prioritising key sectors and enhancing digital infrastructure, the policies set the stage for a more connected, efficient, and technologically advanced future.

From broad-based regulations around AI to policies centred on digital privacy and data protection, 2024 was marked by bills and strategies aiming to drive innovation in a range of sectors from spacetech to cryptocurrency.

Vision for the future:

• In March, the Union Cabinet approved an allocation of over Rs 10,300 crore under the IndiaAI Mission for five years with Rs 551.75 crore budgeted for 2024-25, to drive key initiatives like the IndiaAI Compute Capacity, IndiaAI Innovation Centre, IndiaAI FutureSkills, and IndiaAI Startup Financing, among others.
• Meanwhile, the Karnataka government aims to position itself as a global innovation hub for spacetech through policies like the Draft Karnataka Space Technology Policy 2024-2029, which will focus on all segments of the space value chain for commercial, defence space and electronics and space research. 
• A number of policies crucial for ]tech and startup ecosystem as a whole were introduced during the Union Budget, including the abolition of the angel tax, the setting of Integrated Technology Platform to improve outcomes under the Insolvency and Bankruptcy Code, and financing for R&D by the private sector. 

Investor

Highlighting Bihar’s investor appeal

In a renewed push to make the state of Bihar an attractive investor destination, the second edition of Bihar Business Connect 2024 registered commitments of Rs 1.8 lakh crore from various industry segments. 

The two-day event concluded on December 20 with 423 Memoranda of Understanding (MoU) between various industries across sectors and the state government. It also focused on encouraging MSMEs and startups in the state to set up a base for employment generation and encouraging entrepreneurship.

Fresh capital:

• At the conclusion of the event, the state saw commitments of nearly Rs 90,734 crore from the renewable energy sector, the highest among all investments. Sun Petro Chemicals committed to an investment of Rs 36,700 crore. The renewable sector also saw commitments from Adani Group and NHPC.
• Other sectors contributing significantly included general manufacturing, with commitments to the tune of Rs 55,888 crore, and the food processing industry, with commitments of Rs 13,663 crore. In this, Coca Cola bottler and distributor SLMG Beverages alone committed to an investment of Rs 3,000 crore in the state.
• The event also unveiled upcoming policies as part of a presentation by Bandana Preyashi, Secretary, Department of Industries at Government of Bihar, including the Bihar Food Processing Policy 2024, Bihar Pharmaceuticals Promotion Policy 2024 and Bihar Plastic Manufacturing Promotion Policy 2024, among others.

News & updates

• Pivot: OpenAI, founded a decade ago as a research organization, is considering a change to the AI company’s structure that would create a more conventional money-making corporation alongside a nonprofit arm.
• Royalties: BioNTech has entered into two separate settlement agreements with the U.S. National Institutes of Health and the University of Pennsylvania over the payment of royalties related to its COVID-19 vaccine, the company said in filings.
• Deal worries: Shares in the Japanese carmaker Nissan have had their biggest fall since August’s stock market sell-off, as investors turned their attention to the company’s planned tie-up with domestic rivals Honda and Mitsubishi.

Military leader Napoleon also dabbled in writing what genre of book?

Answer: Romance. 

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If you don’t already get this newsletter in your inbox, sign up here. For past editions of the YourStory Buzz, you can check our Daily Capsule page here.

India took bold strides in 2024 with a series of transformative tech policies aimed at accelerating innovation and economic growth. By prioritising key sectors and enhancing digital infrastructure, the policies set the stage for a more connected, efficient, and technologically advanced future.

“Globally, 2024 marked a year of AI shaping the future vision of companies and nations. In 2024, key policy changes included passing the EU AI Act, the world’s first comprehensive regulation on AI, emphasising risk-based categorisations,” Manpreet Singh Ahuja, Chief Digital Officer and TMT Leader at PwC India, tells YourStory.

“India introduced several transformative tech policies, with a focus on digital privacy, AI, and data protection. The Data Protection Bill, now closer to implementation, sets stringent guidelines for data collection, processing, and storage, ensuring user privacy while promoting digital innovation,” he added

Dive in to read the top tech and innovation policies that shaped the year.

India AI mission

The IndiaAI Mission was launched in March 2024 to establish a robust AI ecosystem in India by creating a high-end computing infrastructure with over 10,000 graphics processing units (GPUs) and promoting indigenous AI technologies. 

In March, the Union Cabinet approved an allocation of over Rs 10,300 crore for the IndiaAI Mission for five years with Rs 551.75 crore budgeted for 2024-25.

The funding will drive key initiatives like the IndiaAI Compute Capacity, IndiaAI Innovation Centre, IndiaAI Datasets Platform, IndiaAI Application Development Initiative, IndiaAI FutureSkills, IndiaAI Startup Financing, and Safe & Trusted AI.

“The policy encourages domestic AI development, which could lead to increased investment in AI research and development within Indian companies,” says Akhilesh Tuteja, Global Head- Cyber Security and Partner and Head, Technology, Media and Telecommunications, KPMG in India.

Powered learning tools could transform the education sector and AI-assisted diagnosis and personalised medicine solutions may emerge due to the policy’s support for AI innovation, he adds.

Karnataka’s Draft Space Technology Policy

Unveiled at the Bengaluru Tech Summit 2024, the Draft Karnataka Space Technology Policy 2024-2029 will focus on all segments (upstream and downstream) of the space value chain for commercial, defence space and electronics and space research—astronomy and astrophysics.

With the draft policy, the Karnataka government aims to position the state as a global hub for space technology by capturing 50% of India’s space market share. It focuses on skill development, investment incentives, infrastructure creation, and support for startups and MSMEs to boost the space sector.

Bio E3 policy

In August, the Department of Biotechnology approved the BioE3 (Biotechnology for Economy, Environment and Employment) Policy to foster high-performance biomanufacturing.

The policy includes innovation-driven support to R&D and entrepreneurship across thematic sectors to accelerate technology development and commercialisation by establishing biomanufacturing and bio-AI hubs, and biofoundry. 

 It also aims to accelerate India’s green growth by advancing the circular bioeconomy.

“By encouraging biotech startups and research, the policy may lead to improved medical treatments and diagnostics,” says Tuteja. He adds that biotech innovations could improve crop yields, disease resistance and sustainable farming practices.

Union Budget 2024

Abolishing angel tax

“The abolishment of angel tax in Budget 2024 is expected to significantly boost India’s startup ecosystem by attracting more investments and fostering innovation,” Tuteja notes.

Integrated Technology Platform

Finance Minister Nirmala Sitharaman also announced the setting of Integrated Technology Platform to improve the outcomes under the Insolvency and Bankruptcy Code for achieving consistency, transparency, timely processing, and better oversight for all stakeholders.

Research and development (R&D)

The finance minister also announced that the government will operationalise the Anusandhan National Research Fund for basic research and prototype development.

Additionally, it will establish a framework to drive private sector-led research and innovation on a commercial scale, supported by a Rs 1 lakh crore financing pool, as announced in the interim Budget.

She also announced a venture capital fund of Rs 1,000 crore to expand the space economy.

PM Internship scheme

Sitharaman also announced a scheme to provide 1 crore youths with internship opportunities in top 500 companies in 5 years. The interns will gain 12 months of exposure to real-life business environments, varied professions, and employment opportunities. They will also get an internship allowance of Rs 5,000 per month along with a one-time assistance of Rs 6,000, with companies bearing the training cost and 10% of the internship cost from their CSR funds.

The pilot project began in October targeting 1.25 lakh internships.

Production-linked incentive schemes

PLI scheme for automobile and auto components industry

Approved on September 15, the scheme aims to enhance India’s manufacturing capabilities for Advanced Automotive Technology products, overcome cost disabilities, and build a robust supply chain.

According to PIB, it has a budget outlay of Rs 25,938 crore over five years. 

Additionally, the scheme offers incentives of 13%-18% for electric vehicle and hydrogen fuel cell components, and 8%-13% for other AAT components. 

Scheme to Promote Manufacturing of Electric Passenger Cars

Notified in March, the scheme aims to position India as a global EV manufacturing hub, attracting investments and boosting domestic value addition (DVA). 

Applicants must invest at least Rs 4,150 crore ($500 million) within three years, achieving 25% DVA, and 50% within five years. Limited imports of e-4Ws at reduced customs duty (capped at 8,000 units annually) are allowed, with duty benefits per applicant capped at Rs 6,484 crore. 

PLI scheme for Advance Chemistry Cell (ACC), Battery Storage in India

The government also approved a Rs 18,100-crore PLI scheme to set up manufacturing facilities for ACC and battery storage, over seven years. 

Three beneficiary firms are set to invest around Rs 14,810 crore to establish 30 GWh ACC capacity. A capacity of 1 GWh is in a pilot run by Ola Cell Technologies in Tamil Nadu. As of October 2024, a total of Rs 1,505 crore investment has been made.

Draft Digital Competition Bill

The Draft Digital Competition Bill 2024 aims to regulate large digital enterprises to ensure fair competition and curb monopolistic practices. It also discusses measures such as the ex-ante framework to address potential anti-competitive behaviours before they occur.

The Bill focuses on preventing big tech companies from favouring their own services and using data from one business to benefit another. It also lists heavy penalties for violations, fostering a level playing field for smaller businesses and promoting innovation.

“Aimed to regulate digital markets and curb monopolistic practices by granting the Competition Commission of India pre-emptive powers…the Bill specifically targets gatekeeper platforms, including ecommerce sites, search engines and social media,” notes Tuteja.

RBI’s revised guidelines for P2P lending

In August, the Reserve Bank of India (RBI) revised its regulatory framework for non-banking financial companies facilitating peer-to-peer lending (NBFC-P2P) to curb malpractice and improve transparency in the sector.

The updated regulations, now in effect, stem from RBI’s findings that several platforms were breaching existing norms, posing potential risks to both lenders and borrowers.

To increase transparency, stricter disclosure requirements have been introduced. Platforms must now report not only the performance of their loan portfolios but also the specific losses incurred by lenders.

PM E-DRIVE

With a budget of Rs 10,900 crore, the PM E-DRIVE scheme builds on the FAME II scheme to promote green mobility and strengthen the EV manufacturing ecosystem.

According to PIB, the allocation includes Rs 3,679 crore for subsidies to support electric two-wheelers and three-wheelers, e-ambulances, and e-trucks; Rs 4,391 crore for the procurement of e-buses by public transport agencies; Rs 2,000 crore for installing fast chargers; Rs 780 crore for upgrading testing agencies; Rs 500 crore each for e-ambulances and e-trucks; and Rs 50 crore for administrative expenses.

Atal Innovation Mission

On November 25, 2024, the Union Cabinet approved the continuation of the Atal Innovation Mission (AIM), under the aegis of NITI Aayog, with an enhanced scope of work and an allocated budget of Rs 2,750 crore till FY28.

AIM 2.0 is designed to strengthen India’s innovation and entrepreneurship ecosystem by ushering in more innovators and entrepreneurs,  improving the success rate of startups and improving the quality of products and services.

MeitY’s Vishvasya

Launched by the Ministry of Electronics and Information Technology (MeitY), the Vishvasya-Blockchain Technology Stack offers blockchain-as-a-service with a geographically distributed infrastructure designed to support various permissioned blockchain-based applications

According to PIB, the technology stack is hosted on geographically distributed infrastructure at NIC Data centres.

Also launched were lightweight blockchain platforms—NBFLite; Praamaanik, an innovative blockchain-enabled solution for verifying mobile app origin; and National Blockchain Portal.

Key announcements to anticipate in 2025

“India is expected to roll out comprehensive guidelines for AI ethics and safety, addressing emerging concerns regarding data usage and AI transparency. Additionally, we should expect more favourable policies and announcements around India’s semiconductor and digital infra vision,” saysid Ahuja, the Chief Digital Officer and TMT Leader at PwC India.

According to Akhilesh Tuteja, Global Head- Cyber Security and Partner and Head, Technology, Media and Telecommunications, KPMG in India the following are the major announcements what to keep an eye out for in 2025.

Digital Personal Data Protection rules

The government of India is set to implement the Digital Personal Data Protection (DPDP) rules in 2025. The DPDP Act passed in August 2023, aims to clarify data protection measures for all companies, including data transfer protocols and exemptions for startups.

Semicon 2.0 

Following the success of the Semicon India initiative, the Indian government is expected to launch SEMICON 2.0 in 2025, which will focus on the entire value chain, including design, fabrication, packaging, and testing.

RBI cloud services

The Reserve Bank of India (RBI) is expected to launch a pilot programme in 2025 to offer affordable local cloud data storage to financial institutions, in collaboration with domestic IT firms, to compete with international cloud service providers and cater to smaller banks and financial firms.

National IT Policy

India is expected to introduce a new national IT policy, replacing the decade-old National Policy on information technology, with the finalisation expected by year-end after consultations with industry stakeholders. The policy aims to boost engineering research and development, employment, global capability centres, workforce skilling and IT product development and sets ambitious export targets for IT products and services over a three-to-five-year timeframe.