What corporate legal services does Corporate Legit provide?

Corporate Legit offers India Entry Services, International Taxation, Direct & Indirect Taxation, Secretarial & Corporate Legal Compliances, Foreign Direct Investment, Intellectual Property Rights, Licensing and Registration, company registration services, Merger and Amalgamation (M&A), Litigation, Virtual CFO Services, International Advisory, Audit Services, and Registration of NGOs.

What India Entry Services do you offer?

India Entry Services helps foreign companies establish operations in India. The service assists with business structuring, necessary approvals, and compliance requirements for foreign businesses seeking to enter the Indian market.

What does your Corporate Secretarial practice cover?

Our Corporate Secretarial practice handles statutory compliance requirements for companies operating in India, including corporate legal documentation, board meeting management, and regulatory filings.

What are your Corporate Restructuring services?

Corporate Legit’s restructuring services include mergers and acquisitions, demergers, and corporate restructuring activities in accordance with regulatory requirements.

What Intellectual Property services do you provide?

We provide trademark search and registration services in IP databases, along with other intellectual property protection services, to safeguard clients’ IP rights in India.

How does Corporate Legit handle taxation matters?

Our taxation practice provides advice under Direct & Indirect Taxation, including income tax planning, GST compliance, double taxation avoidance advisory, and international taxation matters, to ensure clients remain compliant with Indian tax laws

What Registration & Licensing Services do you offer?

Corporate Legit provides registration and licensing services to help businesses obtain the necessary operational permits and registrations to conduct business legally in India.

What are your Regulatory Compliance & Audit Services?

We provide Corporate Compliance services to help businesses meet their statutory obligations and remain compliant with Indian regulatory requirements, along with supporting them through audit services in India whenever needed.

Do you provide Virtual CFO Services?

Yes, Corporate Legit offers Virtual CFO services for businesses requiring financial management expertise without a full-time Chief Financial Officer.

What makes Corporate Legit’s team qualified?

The senior members of the Firm possess professional qualifications in law, accountancy, company secretarial practices and management with international class experience from working with world-class advisory firms, including Big-4 accounting firms and international law firms.

Do you assist with NGO registration?

Yes, Corporate Legit provides Registration of NGOs (Non-Government Organisation) services to help establish non-profit entities in India.

How can businesses contact Corporate Legit?

Businesses can contact Corporate Legit at +91 9990607535, email at office@thecorporatelegit.com, or visit the office at A-77, Second Floor, Sector-4, Noida 201301, New Delhi NCR, India.

April 1, 2026
corporatelegit corporatelegit
Company Law Compliance India
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Regulatory Compliance in India for Fintech Companies: Costs, Risks, and Key Considerations

Once a fintech company secures regulatory approval, the real work begins. The focus moves from getting licences to actually running the business, which means staying compliant, managing data responsibly, and keeping up with regulatory requirements, particularly under regulatory compliance in India frameworks.

Digital Lending Guidelines: What Fintech Lenders Must Know

If your fintech business offers any type of lending, whether it’s personal loans, Buy Now Pay Later (BNPL), merchant cash advances, or invoice discounting, the RBI’s Digital Lending Guidelines issued on September 2, 2022, should be your main compliance reference. As part of regulatory compliance in India requirements, these rules apply not only to RBI-regulated lenders but also to their technology partners and platform providers.

Direct bank account flow

All loan amounts must be transferred directly to the borrower’s bank account. Similarly, repayments must go straight from the borrower’s account to the regulated lender’s account. No pass-through via a platform’s pool account, e-wallet, or any intermediary is permitted to ensure adherence to regulatory compliance in India norms.

Key Fact Statement (KFS)

Every digital loan must include a KFS disclosing the Annual Percentage Rate (APR), all fees and charges, the recovery process, and the grievance redressal mechanism. The KFS must be provided to the borrower before disbursal, in a standardised format prescribed by RBI, as mandated under regulatory compliance in India guidelines.

Cooling-off period

Borrowers must be offered a minimum cooling-off period during which they can prepay the loan in full without penalty. The minimum is 3 days for loans with a tenure of 7 days or more, aligned with the regulatory compliance in India requirements.

No unsolicited credit limit increases

Fintechs cannot automatically increase the borrower’s credit limit or disburse additional funds without explicit, individual consent from the borrower for each instance, in line with regulatory compliance in India standards.

Lending Service Providers (LSP) disclosure

The name of the RBI-regulated entity on whose behalf loans are being originated must be clearly disclosed on the digital lending app. The legal lending relationship is between the borrower and the regulated entity, not the platform.

Restricted data access

Lending apps should only collect the data that is genuinely necessary to provide their services. Access to contacts, photos, or call logs is not allowed unless it is absolutely required and the borrower has clearly agreed to it.

Non-compliant digital lending apps have faced Google Play Store removal, bank partnership terminations, and RBI cease-and-desist orders. Several fintech lending companies were asked to shut down their operations in 2023 and 2024 after failing to comply with the norms of regulatory compliance in India.

Ongoing Compliance Obligations

Receiving an RBI licence is the beginning of your compliance obligations, not the end.

RBI Reporting and Returns

As part of ongoing regulatory compliance in India obligations, Payment Aggregators must periodically report transaction data, fraud incidents, and compliance updates to the RBI. NBFCs also have similar obligations, including regular financial reporting and maintaining a minimum 15% CRAR each year, forming a key part of regulatory compliance in India.

KYC and AML Compliance

RBI-regulated fintechs are required to put strong KYC and AML processes in place as mandated by the PMLA and the RBI KYC Master Direction. This includes verifying customers at the time of onboarding, continuously monitoring transactions, reporting suspicious activity within a week, and retaining records for five years after account closure. Payment Aggregators also need to verify the identity of merchants before allowing them onto their platforms.

Data Localisation

RBI mandates that all payment system data, such as end-to-end transaction details, customer data, payment credentials, and processing records, must be stored exclusively in systems physically located in India. Cloud providers must guarantee Indian data residency for RBI-regulated data. This is not optional and cannot be deferred.

Digital Personal Data Protection Act, 2023 (DPDP Act)

The DPDP Act requires fintechs to obtain explicit, purpose-specific consent before collecting personal data, provide clear privacy notices, implement security safeguards proportionate to data sensitivity and volume, report data breaches to the Data Protection Board of India, and honour data erasure requests from users. Fines under the DPDP Act can go as high as ₹250 crore for every violation and are imposed independently of RBI penalties. In serious cases, one data breach can bring enforcement action from several regulators at the same time, including RBI, the Data Protection Board, and CERT-In.

IT Act, 2000, and CERT-In Directions, 2022

The April 2022 CERT-In directions make it mandatory for companies to report cyber incidents within 6 hours, preserve system logs for 180 days, and establish a designated communication contact. These rules act as fundamental compliance requirements on top of RBI regulations, which are mandatory under regulatory compliance in India.

Grievance Redressal

Fintechs such as PAs and NBFCs are required by the RBI to implement a structured grievance redressal process. This involves appointing a responsible officer, making complaint procedures transparent, responding quickly to customer concerns, and resolving them within 30 days. Any unresolved complaints can be taken to the RBI Ombudsman.

Minimum Capital

The minimum capital requirements are the largest financial commitment: ₹10 crore NOF for an NBFC, ₹15 crore net worth for a PA. Budget an additional ₹25 lakh to ₹50 lakh for the full compliance stack, legal, audit, technology infrastructure, and regulatory advisory before submitting an RBI licence application.

RBI Regulatory Sandbox

If your fintech product is genuinely innovative and does not fit neatly into an existing regulatory category, RBI’s Regulatory Sandbox framework allows eligible startups to test products in a controlled environment with limited regulatory relaxations for a defined period, which is generally 6 months, extendable to 12 months.

The sandbox operates in thematic cohorts. In the past, the sandbox has included themes like retail payments, international payments, MSME financing, and fraud prevention. Selected startups are allowed to test their solutions with actual users, although within controlled parameters like transaction limits and user caps.

Startups that successfully complete the sandbox process may find it easier to move toward full regulatory approval. Applications are submitted through the RBI portal. The sandbox is particularly useful for fintechs working with blockchain-based payments, AI-based credit scoring, embedded finance, or new cross-border payment mechanisms that existing regulatory categories do not adequately cover.

Foreign Investment and FEMA Compliance

Foreign companies and NRIs looking to enter India’s fintech market do so by incorporating an Indian subsidiary as a Private Limited Company and independently applying for the relevant RBI licence, under regulatory compliance in India for foreign investment.

FDI up to 100% is permitted under the Automatic Route for NBFC activities (18 specified activities), payment systems (with RBI authorisation), and most fintech categories. Insurance has a sectoral cap of 74%, and pension has a cap of 49%. After shares are issued to a foreign investor, the Indian subsidiary must report the transaction by filing Form FC-GPR (Foreign Currency Gross Provisional Return) within 30 days. Supporting documents such as the FIRC (Foreign Inward Remittance Certificate), investor KYC, a valuation certificate, and Board approval documents must also be submitted.

In cases where shares move between an Indian resident and a foreign investor, Form FC-TRS needs to be filed within 60 days of the transaction or payment receipt. Missing this deadline can result in penalties and FEMA compliance issues that could slow down future investment rounds.

Common Mistakes That Cost Founders Time and Capital

The following are some common gaps in regulatory compliance in India:

Starting with the wrong entity type: Many founders register as an LLP or sole proprietorship, only to later realise that the RBI only grants licences to companies, making conversion both time-consuming and expensive.
Incorrect MoA objects clause: The MoA should clearly specify the fintech activities you plan to carry out. If the object clause only mentions general activities like software development or IT services, it will need to be amended before you can apply for an RBI licence.
Underestimating net worth timelines: The required net worth must be reflected in audited financial statements, not provisional figures. If you raise a funding round and plan to apply immediately, confirm with your auditor that the audited accounts will reflect the capital infusion before you file.
Filing without the CERT-In system audit: For PA applications, submitting without a completed CERT-In audit and PCI-DSS certification results in immediate requests for additional information from RBI. Complete the audit before filing.
No escrow bank arrangement in place: Payment Aggregator applicants should be prepared for delays when setting up escrow partnerships, as banks typically take time to complete their due diligence. Begin these conversations 3 to 6 months before your planned RBI application submission date.
Treating compliance as a post-launch exercise: Data localisation, DPDP Act compliance, AML policies, and grievance redressal mechanisms must be in place before you process a single transaction. Building these into your product from the MVP stage is significantly less expensive than retrofitting them under regulatory pressure.
Ignoring the Digital Lending Guidelines: Fintech lending platforms that route disbursals or repayments through their own accounts, even briefly, are in direct violation of the September 2022 guidelines. These kinds of violations can have serious consequences, including losing banking partnerships, getting delisted from app stores, and facing regulatory action.

Conclusion

Starting a fintech company in India requires clearly mapping your business model to the correct regulatory category before a single incorporation document is filed. The entity structure, objects clause in the MoA, minimum capital planning, technology infrastructure, and compliance policies must all be designed with the RBI licence application as the end goal, not as an afterthought. Company incorporation takes 7 to 15 days and costs ₹6,000 to ₹15,000. Getting regulatory approval can take anywhere between 6 to 18 months and, depending on the type of licence, may require a minimum capital ranging from ₹2 crore to ₹15 crore.

Budget for the full compliance stack, including PCI-DSS certification, CERT-In audits, legal advisory, and data infrastructure before you apply. The regulatory framework governing fintech in India is well-defined, actively enforced, and strictly monitored by the RBI. Startups that prioritise regulatory compliance in India from day one are much less likely to face expensive product changes later due to unforeseen regulatory requirements. Starting a fintech in India goes beyond registration, it requires a strong compliance foundation from day one. CorporateLegit provides end-to-end support, from company setup to regulatory approvals and continuous compliance, helping you build on a strong and cost-effective foundation.

FAQ

1. What compliance is required for fintech companies in India?

Fintech companies in India must comply with multiple regulatory frameworks depending on their business model. These include RBI regulations (for NBFCs, Payment Aggregators, and lending platforms), KYC and AML requirements under PMLA, data localisation rules, the Digital Personal Data Protection Act, and reporting obligations such as RBI returns and FEMA filings.

2. Do all fintech companies in India need RBI approval?

Not all fintech companies require direct RBI licensing. Businesses involved in lending, payment processing, or financial intermediation typically need RBI approval. However, fintechs operating as technology providers or SaaS platforms may not require licensing but must still comply with applicable data protection and IT regulations.

3. What are RBI Digital Lending Guidelines and why are they important?

The RBI Digital Lending Guidelines regulate how digital loans are disbursed, serviced, and recovered. They ensure transparency, protect borrowers, and prevent misuse of customer data. Non-compliance can result in serious consequences such as platform shutdowns, regulatory action, or loss of banking partnerships.

4. What happens if a fintech company does not comply with RBI regulations?

Non-compliance can lead to penalties, cancellation of licences, restrictions on operations, or enforcement actions by the RBI. In severe cases, companies may be required to cease operations, and their apps may be removed from platforms like Google Play Store.

5. Is data localisation mandatory for fintech companies in India?

Yes, RBI mandates that payment-related data must be stored within India. Fintech companies must ensure that their data infrastructure, including cloud storage, complies with Indian data residency requirements.

6. What is the Digital Personal Data Protection Act (DPDP) and how does it impact fintech companies?

The DPDP Act requires fintech companies to obtain user consent before collecting personal data, implement security safeguards, and report data breaches. Non-compliance can result in penalties of up to ₹250 crore per violation.