FinTech Updates

The Reserve Bank of India (RBI) has introduced the Digital Lending Directions, 2025 to regulate the rapidly growing digital lending ecosystem. These updated guidelines aim to reinforce consumer protection, enhance operational transparency, and ensure responsible lending by both traditional financial institutions and emerging fintech players.

NPCI has issued a circular (accessible here) introducing tighter regulations on UPI API usage to mitigate system overloads caused by excessive “check transaction status” requests. Payment Service Providers (PSPs) and acquiring banks are now required to make such API calls only after a specified cooling period—initially 90 seconds, subsequently reduced to 45–60 seconds post-authentication—and limit these calls to a maximum of three per transaction within a two-hour timeframe. Unauthorized or standalone API calls are prohibited without prior approval. Additionally, all banks must carry out immediate and annual audits through CERT-In empanelled auditors. Non-compliance may lead to penalties, and NPCI is also considering implementing rate limiters to ensure the stability of the UPI system.

The National Payments Corporation of India (NPCI) has issued an addendum (accessible here) requiring that the ultimate beneficiary’s name, as per bank records, be displayed during both person-to-person (P2P) and person-to-merchant (P2M) transactions on UPI apps. This replaces the use of aliases or names derived from QR codes. Additionally, UPI apps must disable any functionality that allows users to modify the beneficiary’s name within the app interface. All participants in the UPI ecosystem are required to comply by June 30, 2025; failure to do so will be considered non-compliance.

The Reserve Bank of India (RBI) has authorized the National Payments Corporation of India (NPCI) to increase the transaction limit for Unified Payments Interface (UPI) person-to-merchant (P2M) payments beyond the current ₹2 lakh cap (accessible here) to support new and evolving use cases. The ₹1 lakh limit for UPI person-to-person (P2P) transactions remains unchanged. Banks may continue to set their own limits within the revised thresholds set by NPCI, provided appropriate risk management measures are in place.

The Reserve Bank of India (RBI) has introduced the PRAVAAH (Platform for Regulatory Application, Validation And Authorisation) portal to digitize and streamline the submission of applications for regulatory approvals, licenses, and authorisations (accessible [here]). Effective from May 1, 2025, all applicants, including Regulated Entities (REs), are required to file their applications via PRAVAAH using the designated forms.

As part of its ongoing ‘RBI Kehta Hai’ public awareness campaign, the Reserve Bank of India (RBI) has launched a verified WhatsApp channel titled ‘Reserve Bank of India’ (accessible [here]). This initiative is designed to share key financial information with the public in a clear, convenient, and user-friendly format.

The Reserve Bank of India (RBI) has mandated the transition of all bank websites to the exclusive ‘.bank.in’ domain, as part of its broader efforts to reinforce cybersecurity and increase public confidence in the financial system amid growing digital payment fraud (accessible [here]).

On April 9, 2025, the Reserve Bank of India (“RBI”) released the Draft Reserve Bank of India (Co-Lending Arrangements) Directions, 2025 (accessible [here]), proposing an expanded regulatory framework for co-lending arrangements (“CLAs”) beyond the existing Priority Sector Lending (“PSL”) model.

The Reserve Bank of India (“RBI”) has expanded its Regulatory Sandbox framework by introducing an ‘On Tap’ application facility for Theme-Neutral proposals, as announced in its Statement on Developmental and Regulatory Policies dated April 9, 2025 (accessible [here]).

The Reserve Bank of India (“RBI”), through a circular dated April 24, 2025 (accessible [here]), has amended the Master Directions on Compounding of Contraventions under the Foreign Exchange Management Act, 1999 (“FEMA”), by introducing a new provision—Paragraph 5.4.II.vi.

The Reserve Bank of India (“RBI”) has issued revised guidelines titled ‘Opening and Operation of Deposit Accounts of Minors’ (“Revised Guidelines”), effective from April 1, 2025 (available here). Key highlights of the Revised Guidelines include: