Right time to regulate, set guardrails: Fintech leaders at BS BFSI event

Young and innovative fintech firms can push boundaries even within regulatory limits

Now is the right time to enhance regulation in India’s financial technology (fintech) sector, industry leaders and experts said on Thursday at India’s biggest banking, financial services, and insurance (BFSI) event, the Business Standard BFSI Insight Summit, in Mumbai.

 

The panel, which discussed “Navigating the Future of Fintech: Innovation, Regulation, and Growth”, concluded that regulatory action in the Indian fintech space is neither ad hoc nor arbitrary. Instead, it is driven by structured processes, with sufficient time given to industry participants to respond, and involves active dialogue between fintech players and regulators.

 

‘Need to set up guardrails’

 

Actions by Indian regulators are calculated, with decisions passing through exhaustive evaluation and multiple levels of checks before reaching the market, said Anurag Jain, founder and executive director of KredX, on the panel moderated by Business Standard's Suveen Sinha. “They are there for a genuine reason,” he added.

   

Explaining that the fintech industry is evolving, KredX’s Jain asserted that there is a need to set up guardrails, which is being done at present. He added that regulation in the fintech sector is for the country’s benefit and rejected any notion that regulators were at fault.

 

‘Long-term spirit of regulations always known’

 

Stressing that regulations are not introduced in a knee-jerk manner, Ujjwal Jain, chief executive officer of Share.Market, noted that the “long-term spirit” of a regulatory rule is always clear. He added that regulators have been collaborating with industry participants to evolve these regulations.

 

According to Share.Market’s Jain, Indian regulators, particularly the Securities and Exchange Board of India (Sebi), have done commendable work.

 

‘Fintech transitioning from adolescence to adulthood’

 

Now is an “ideal time” to establish guardrails since fintech players have matured, said Akshay Mehrotra, co-founder and CEO of Fibe.India. He pointed out that in the past, fintech players lacked the scale to comply with regulatory processes.

 

As many industry participants have grown into large financial services businesses, they require stronger governance, argued Mehrotra, adding that the industry is transitioning from adolescence to adulthood, making this the right time to regulate.

 

‘Don’t burn down the house’

 

Advising newer fintech players on innovating responsibly, Reeju Dutta, co-founder of Cashfree, remarked: “Don’t burn down the house as you innovate.”

 

Dutta advised young fintech companies pushing boundaries to keep customer interests central and avoid creating systemic risks—a primary concern of regulators.

 

‘Firm’s commercial model not being judged’

 

The regulator does not judge an entity’s business model, explained Srinath Sridharan, independent director at the Fintech Association for Consumer Empowerment (FACE).

 

Instead, Sridharan noted that a company would only face shutdown if it is non-compliant with regulations—a natural approach given these firms handle public funds.

 

On decentralised finance (DeFi), Sridharan said Indian regulators are wary of systems lacking trackability, traceability, an audit trail, and data governance, as well as any technology that challenges sovereign authority.