Will fintech firms' governance standards, role of PEs attract scrutiny?

Fintech promoters, their private equity backers, and regulated entities that have teamed up with new-age firms will need to go back to the drawing board

Marquee financial firms have of late been at the receiving end of the Reserve Bank of India’s (RBI’s) displeasure. MasterCard International, American Express and Diners Club International were barred from on-boarding new customers for non-compliance with data-localisation norms (Diners is now back in business). And in December 2020, HDFC Bank was prohibited from launching new digital products — a restriction that was lifted only last month.

Will fintech firms’ governance standards, their arrangements with RBI-regulated entities (banks and non-banking financial companies), and the role of private equity (PE) firms also attract stricter scrutiny? That time may well be upon us.

The setting

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