India strengthens fintech regulations for consumer protection: Govt

The government has enhanced the regulatory framework for India's fintech sector to improve oversight of digital lending and payment aggregators, said MoS Finance Pankaj Chaudhary. The measures aim to boost consumer protection and prevent cyber fraud.

The government on Monday said it has strengthened the regulatory framework governing India's fintech ecosystem through a series of measures aimed at improving oversight of digital lending platforms, payment aggregators and consumer protection, while enhancing safeguards against cyber fraud.

In a written reply in the Lok Sabha, Minister of State for Finance Pankaj Chaudhary said the government has been "constantly engaging with the financial sector regulators and other concerned stakeholders to review the issues related to fintech ecosystem including digital lending platforms and payment aggregators in the country."

The minister said that based on these reviews, "various regulatory and supervisory interventions have been taken from time to time" to strengthen the sector and protect consumers.

Key Regulatory Interventions

Among the key measures highlighted, the Reserve Bank of India (RBI) issued the Framework for Self-Regulatory Organisation(s) in the FinTech Sector (SRO-FT framework) in May 2024. According to the written reply, the framework aims at "establishing and enforcing regulatory standards, promoting ethical conduct, ensuring market integrity, resolving disputes, and fostering transparency and accountability among its members."

The government also highlighted steps taken to improve the security of digital payments. It said RBI's Master Directions on Digital Payment Security Controls require banks to implement minimum security standards across payment channels, while the National Payments Corporation of India (NPCI) provides a fraud monitoring system that uses "Artificial Intelligence (AI)/Machine Learning (ML) based models for Unified Payments Interface (UPI) transactions" to generate alerts and block suspicious transactions.

The government said the Ministry of Electronics and Information Technology has notified the Digital Personal Data Protection Act, 2023 (DPDP Act) and the DPDP Rules, 2025 "to protect personal data of individuals."

The minister also said RBI's Regulatory Sandbox framework, introduced in 2019, enables financial technology companies to test innovative products and services in a controlled regulatory environment "with or without regulatory relaxation."

Consumer Protection Measures

On consumer protection, the government said citizens can report cyber incidents, including illegal loan apps, through the National Cybercrime Reporting Portal and the 1930 cybercrime helpline.

It added that RBI and banks continue to conduct awareness campaigns and electronic banking awareness and training (eBAAT) programmes focused on fraud prevention and risk mitigation.

(Except for the headline, this story has not been edited by Asianet Newsable English staff and is published from a syndicated feed.)