In an exclusive interaction with Finance Outlook India, Shams Tabrej, Co-Founder & CEO of Ezeepay, shares his insights on how evolving RBI and NBFC regulations are reshaping India’s fintech landscape, particularly in driving sustainable financial inclusion. Drawing on his deep experience in banking, digital payments, and last-mile financial delivery, he highlights that the sector is entering a consolidation phase where compliance, governance, and trust will drive sustainable growth. Shams Tabrej notes that while regulatory clarity may increase short-term costs, it ultimately improves unit economics, risk management, and customer confidence. He further emphasizes the role of structured fintech–NBFC partnerships, AI-led fraud prevention, and retailer-led banking correspondent networks in enabling scalable, secure, and inclusive financial access across rural and semi-urban India

With the RBI tightening regulatory norms across NBFCs and fintechs, do you foresee a phase of consolidation in the industry? How is Ezeepay positioning itself amid this shift toward a more compliance-driven ecosystem?

A phase of consolidation driven by compliance is unavoidable and beneficial to the industry in many respects. The fintech sector has developed quickly, where innovation and regulation are now occurring simultaneously. While companies focused primarily on regulatory arbitrage may find it challenging to scale, in response to that, we anticipate stronger, well-governed organizations with sustainable strategies to increase their market share.

We at Ezeepay see this change as an opportunity rather than a problem. Strong governance, sustained collaborations with regulated organizations, and responsible expansion have always been the cornerstones of our model. We have continuously made investments in strong internal controls, transaction monitoring, compliance architecture, and partner due diligence. Trust and execution discipline become crucial differentiators as the ecosystem gets more compliance-driven, which is in keeping with our operating philosophy.

Regulatory clarity often brings both discipline and cost pressures. How do you assess the impact of increased compliance requirements on the unit economics and profitability of fintech players operating at scale?

Higher compliance requirements, whether through technological improvements, audit controls, risk management layers, or reporting duties, do increase operating costs in the short term. But in my opinion, this is more of an investment in sustainable unit economics than a hindrance to profitability.

Compliant operational models typically lessen long-term costs of interruptions, enhance portfolio quality, increase customer trust, and decrease hidden risks at scale. Quality of growth is becoming more important than expansion at any cost. Over time, regulatory discipline can strengthen company resilience and boost profitability for established fintechs.

Players that can integrate compliance into operational effectiveness instead of viewing it as an overhead will be rewarded by the industry more and more.

The fintech–NBFC partnership model has been under closer scrutiny. In your view, how will these evolving guidelines reshape the structure of such collaborations, particularly in the digital lending space?

Although it is becoming more structured and accountable, the partnership model is not going away. Growth partnerships that are loosely linked are giving way to more precisely defined, risk-shared alliances. I anticipate more clearly defined roles in the future with regard to underwriting, sourcing, servicing, data ownership, and customer grievance duties. This will lower systemic risks and increase transparency.

The approach will probably shift away from origination-led partnerships and toward tighter integration, particularly in digital lending. Distribution, data intelligence, and user experience will be brought by fintechs, while prudential control will remain anchored by regulated institutions. The next stage will focus on appropriate cooperation rather than unrestrained growth.

Ezeepay has built a strong presence through its retailer-led banking correspondent network. How are regulatory changes influencing the operational dynamics, incentives, and sustainability of this last-mile distribution model?

The BC model is becoming more reliable and credible due to regulatory change. Stronger controls on client verification, transaction security, onboarding, and service responsibility are being promoted, which eventually helps the ecosystem. Trust at the last mile has always been key to Ezeepay's retailer-led network. This network is becoming more professional because of changes in regulations. To ensure sustainability, we are supporting incentive structures, fraud prevention procedures, compliance monitoring, and agent training.

I think the BC model will continue to be essential to financial inclusion in India, especially in situations where digital-only models have drawbacks. Now, the focus is on strengthening this network's resilience, compliance, and economic viability.

With the launch of Ezeepay’s UPI Cash-Out service, you are bridging digital payments with physical cash access. Does this signal that India continues to operate as a “cash-reliant digital economy”? What strategic insight led to this innovation?

India is developing as a hybrid economy where both coexist rather than making a straight move from cash to digital. Our thought behind UPI Cash-Out was influenced by that situation. Cash is still quite important, especially in semi-urban and rural ecosystems, even if digital payments have greatly expanded. Our strategic realisation was straightforward: innovation should take user behaviour into account rather than assuming it.

Convenience and inclusivity are connected through UPI Cash-Out. It addresses a practical demand for cash access while utilising digital rails. This is not a contradiction, but rather an innovation in infrastructure. Fintech's future is in figuring out how India transacts, not how we think it ought to.

As fintech adoption deepens in rural and semi-urban markets, how do you balance affordability, accessibility, and risk management, especially in an environment of rising fraud and cybersecurity concerns?

Risk discipline cannot be sacrificed for scale in underserved markets. Our strategy has been to use technology, local distribution, and client education to balance all three. Lean delivery models lead to affordability. Our store network and assisted digital strategy provide accessibility. Layered defences, including fraud analytics, transaction restrictions, real-time monitoring, and awareness campaigns, are the foundation of risk management.

Additionally, fraud protection and cybersecurity are becoming essential components of product design and cannot be seen as backend functions. Trust is frequently the first product in new markets, and safeguarding that trust is essential.

Ezeepay has integrated AI and ML into its fraud prevention framework. How critical is technology-led risk intelligence in building long-term customer trust, and what investments are required to sustain this capability?

In digital finance, trust is increasingly based on technology-driven risk intelligence. Manual controls are insufficient at scale. AI and ML boost fraud detection, anticipate threats, detect abnormalities, and speed up response times. However, this is a continuous investment in data infrastructure, model improvement, cyber resilience, and qualified risk personnel, as it is not a one-time capacity.

For us, preventing fraud is a strategic trust layer rather than just a compliance necessity. Fintech leaders will ultimately be characterised by both innovation and risk intelligence.

Do you believe that stringent regulatory compliance could evolve into a competitive advantage or entry barrier within the fintech ecosystem? How might this impact smaller or emerging players?

Increasingly, compliance will serve as both a barrier to participation and a competitive advantage. Strong governance can be a big benefit for serious long-term players since it increases investor, partner, and customer trust. However, if they are not prepared for compliance, smaller players can be under pressure.

Nevertheless, I do not believe that regulations are anti-innovation. By promoting more robust models, it can actually raise the caliber of innovation. Instead of treating regulations as something to be retrofitted later, emerging players will need to create with compliance by design.

From your on-ground experience, are current regulatory measures adequately aligned with the realities of financial inclusion at the grassroots level, or is there a risk of over-regulation slowing down access to credit and services?

Regulation is obviously intended to be beneficial, but caution must constantly be balanced with practical considerations. Policy frameworks need to take into consideration the fact that inclusion markets frequently function differently from urban digital segments. If compliance structures are not carefully tuned, they run the danger of increasing friction at the last mile. Proportionate regulation with strong protections without compromising access is the best course of action.

I think it will be crucial to maintain industry-regulator communication in order to guarantee that inclusion and compliance develop together.

Also Read: How AI Is Shaping Fintech in India

How do you see the future of digital lending evolving in India, particularly with tighter consumer protection norms and increasing accountability across the value chain?

The next stage of digital lending will be characterised more by ethical credit delivery than by quick disbursement. Standards for consumer protection are driving the industry toward more responsibility, tighter underwriting, suitability-driven products, and increased transparency. This evolution is beneficial.

Particularly for underprivileged groups, I think digital financing will shift toward more embedded, contextual, and data-informed models. However, portfolio quality and client outcomes, rather than just origination volumes, will increasingly be used to gauge growth.

In terms of business strategy, how has regulatory clarity influenced investor sentiment, capital allocation, and Ezeepay’s expansion roadmap across India?

Because it lowers uncertainty and promotes long-term planning, regulatory clarity typically boosts investor confidence. Businesses that operate in environments that are predictable and well-governed tend to attract capital. This has strengthened Ezeepay's focus on sustainable growth as opposed to aggressive growth. With a stronger focus on risk-adjusted growth, we are still investing in distribution expansion, technological infrastructure, and related financial services prospects.

Clearer regulations are, in many respects, directing investments toward more robust company structures.

Looking ahead, what key trends across payments, embedded finance, and micro-financial services will define the next phase of fintech evolution in India, and where does Ezeepay aim to lead?

Three major themes will influence the next stage of fintech in India: intelligence-led financial infrastructure, supported digital inclusion, and embedded financial services.

Payments will expand into more comprehensive financial journeys rather than just transactions. Through contextual products for small enterprises and underserved users, embedded finance will grow. The last mile will see a greater integration of micro-financial services, including credit, savings, insurance, and cash access.

Our goal at Ezeepay is to take the lead at the nexus of innovation and inclusivity. Our goal is to create infrastructure that democratises Bharat's access to financial services while utilising technology to make that access safe, scalable, and long-lasting.