Fintech 2021

Plan C is an endeavor of the contributors at My Lawrd to track recent developments in the Indian techno legal space. During many of our research projects, we felt an urge to consolidate recent developments for convenience, reliability, and efficiency. Although the so aggregated information was initially thought to be used within our organization, our kind contributors, who also happen to be passionate about the technology law community, decided to share this information with you folks! So here’s what’s happening in Fintech in 2021. Happy reading & researching!

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Date: 4.01.2021 

“Google Pay is accessing Aadhar Data of citizens without any authorization”

A PIL has been filed in the Delhi High Court alleging that Google’s G Pay is accessing and storing Aadhar and banking information of citizens which is in violation of various statutory provisions. The petitioner Abhijit Mishra also claimed that according to reply of RTI filed by him in the UIDAI, Google did not get any such permission nor Google applied for any permission. Petitioner further claimed that this is in violation with citizens right of privacy and Aadhar Act of 2016, Payment and settlement act 2007 & Banking regulation act 1949 are also being violated here.  Court also asked the petitioner to file an affidavit which includes previous PILs against Google’s online payment application G Pay and their present status. Next date of hearing is set on 14th January, 2021.  



Date: 04.01.2021 

RBI introduced digital payment index to keep a check on Adoption”

To track the usage of digital payment platforms, RBI has launched Digital Payment Index DPI).  Base year for DPI has been set at 100 as of March 2018 and data has shown that as of March 2019 and March 2020 DPI stood at 153.47 & 207.84 respectively, which indicates significant growth over a two-year period. Five major parameters and few sub-parameters are there, which include; 

  • Payment Enablers  
  • Payment Infrastructure (One from demand side and other from the supply side) 
  • Payment Performance  
  • Consumer Centricity  

However, there are two aspects which may require further discussion; 

Firstly, Customer related issues are given weightage of only 5% and majority index is focused on “Performance” aspect of platforms. 

Secondly, RBI has placed Transaction decline rates System downtimes under consumer centricity and not under supply side of Payment Infrastructure.  



Date: 06.01.2021 

“2020 was a good year for Cyber Criminals and a bad one for Financial and Payments Security”

In the wake of the Covid 19 pandemic, businesses, educational institutions and almost every activity moved online. Cybercrimes have also increased particularly for banks and payment companies and number of individuals victim of phishing has also increased. According to information given in parliament by the Ministry of electronics and Information Technology (MEITY) in September, CERT-IN had reported 696,938 cyber security incidents between January 2020 to August 2020 compared to only 396,456 incidents in whole 2019. There are some of the techniques used by the cyber criminals to target the public: 

  • Fake Websites and illegitimate seller accounts of E-Commerce websites. 
  • Fake UPI IDs 
  • Even instances of fake insurance websites to sell insurance policies have also been reported.  



Date: 13.01.2021

“RBI says NPCI responsible for operating UPI services”

RBI stated that the NPCI (National Payments Corporation of India) is responsible for operating UPI (Unified Payments Interface) services. There is a huge concern about the misuse of data collected by the UPI platforms run by companies like Google, Amazon, and WhatsApp providing the UPI services. RBI stated that the retail payments organization is the sole entity responsible for ensuring companies comply with all rules and regulations. According to RBI, these payment apps are not system providers. Therefore, they do not fall under the regulatory domain of RBI directly. NPCI is the system provider of UPI and, therefore, comes under the regulatory radar of RBI.



Date: 13.01.2021

“FIU to clear stand on PayPal penalty case”

Delhi HC issued notice to the FIU and sought its stand on PayPal’s plea by February 26. A few days ago, the Financial Intelligence Unit (FIU), India fined the online payments major PayPal with 96 Lakh for allegedly violating anti-money laundering law. PayPal was charged with failing to register itself as a “reporting entity” with FIU including other charges. The court, in this matter, issued a notice to FIU seeking its stand and stayed an earlier order, subject to PayPal maintaining records of all its transactions and depositing a guarantee of Rs 96 lakh within two weeks. RBI was made a party to the matter. The court has also directed the RBI and the Ministry of Finance to constitute a committee to take a policy decision on whether such an entity can be considered as a reporting agency and would be governed by the Prevention of Money Laundering Act (PMLA).




“RBI constitutes Working Group on Digital Lending”

In a press note RBI has constituted an internal working group. This committee is supposed to recommend regulations, policies for consumer protection and creating a fair practices code for Fintech and lending industries. Bank and Non-Bank lenders under RBI have been outsourcing their customer procurement to third party and online lending platforms. With the advancement of technology, Fintech also entered the lending space helping lenders cut down cost of Acquistion and lending. Due to lack of customer awareness, several instances of fake lending websites emerged. They ask for huge interest rates on small loan amounts and even steal customer’s personal information. Such websites remain un-regulated. Increase in online lending platforms have raised some serious concerns. RBI has told the Working Committee to submit its report in three months. 



Date: 13.01.2021

“Google seeks regulatory status of Lending apps, threatens removal from Play Store”

Google team has sent emails to various digital lending apps on play store w.r.t their regulatory status. If they don’t reply within the stipulated time, Google will remove them from Play Store. This is due to several cases of customer harassment by these lending apps, which charge exorbitant interest. If customers default, these apps harass them with texts or turn to social media to taunt the borrower amongst their friends and family. According to Google Play Store’s Developer Policy, personal loan apps require disclosure of key information such as minimum and maximum period of repayment, maximum annual percentage rate and a representative example of the total loan cost. Further it states “personal loan apps that require full repayment greater than or equal to 60 days is issued to operate on Play Store.” 



Date: 13.01.2021

“Kerala to bring in legislation regulating predatory loan applications”

The Kerala government plans to introduce regulatory framework for digital lending apps. This is because several instances of suicides across multiple cities have been reported and all the victims were tremendously indebted to these digital lending companies charging exorbitant interest rates on small loans. This decision came after motion was introduced by congress MLA, K Sabarinath to bring in the appropriate law to curb such practices. In June last year, RBI directed Banks and Non-Bank lenders who use third party websites and apps to provide better transparency in the loan documentation. While RBI is trying to make customers and banks more and more aware of such fraudulent practices, Union Government is yet to take formal acknowledgment of the same.



Date: 15.01.2021

“Post COVID-19, 80% of Households use payment apps and 36% adopted Digital payments”

According to survey conducted by National Payment Corporation of India, at least 80% of the households use digital payment apps like Paytm, Google Pay, PhonePe and over half of them use Unified Payment interface (UPI) for payment transactions. The survey conducted by the People Research on India’s Consumer Economy (PRICE) and citizen Environment covered 5314 households across 25 different states and classified them according to their income levels. Although the overall volume of digital payments dipped during the lockdown; common households, merchants turned to digital payment apps and fintech for daily spending. The report establishes that in India, digital payment apps have gained significant traction across the country.  


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