The interim government focused on several critical areas, including online gaming, fintech, cryptocurrency, agritech, and drones. Several ministers, members of Parliament, and heads of various regulatory bodies expressed concern about the need for tighter regulatory measures to keep a lid on the mushrooming start-ups in these industries.  Fintech start-ups, particularly those focused on digital lending, drew the most interest from the finance ministry and other market authorities. Outgoing finance minister Nirmala Sitharaman was spotted addressing in Parliament about regulating digital lending apps.

Some of the main advances in the fintech business during the previous few years include:

The RBI has set a 30% market cap on Paytm to prevent Google Pay and PhonePe from dominating the UPI payments sector. According to NPCI data, fintech applications are outpacing banks in the UPI payments race.

Listing of companies on the GIFT City-based India International Exchange 

In a bid to boost the ecosystem, Sitharaman, along with other ministers and heads of regulatory bodies, interacted with 10,244 fintech entities of India in February this year.

During the meeting, it was noted that Aadhar, UPI, API Setu, among others acted as enablers for start-ups and fintechs and simplified incorporation of companies, recognition of P2P lenders as non-banking financial companies (NBFCs), regulatory sandbox, fintech repository, SRO Framework for fintech, etc have facilitated the start-up ecosystem in India.

As per Ramesh Punugu, Global Head Buy Side Research, Acuity Knowledge Partners, it is important to understand what’s next for the sector as the new government prepares to form the cabinet.

"As per global fintech adoption index 2023, India's fintech adoption rate stands at 87% compared to the global average of 64%, demonstrating how India has outgrown the global average in terms of digital adoption on the back of ongoing financial inclusion efforts such as Pradhan Mantri Jan Dhan Yojana."

He went on to say that demonetisation and active government promotion had resulted in exponential growth in India's digital payment systems. UPI transactions rose from 9.4 billion in May 2023 to 14.0 billion in May 2024, representing a 49% rise year on year. The average daily transaction volume grew from 303.7 million to 452.8 million throughout the same time period. The number of banks linked to UPI has also expanded from 414 in April 2023 to 581 in April 2024, representing an increase of 167 banks in one year.

Commenting on the overall ecosystem structure, he added that the current government's continued presence is expected to enhance India's start-up and fintech sectors. Continued government support through initiatives, expanded funding opportunities, and a favorable regulatory environment are expected to fuel growth and innovation.