RBI’s Regulatory Moves and Startup Landscape in India

RBI's Regulatory Moves and Startup Landscape in India

VoM News Desk | December 23, 2023 | 10:06 AM IST | Breaking News | Follow on Google News

RBI’s Regulatory Moves and Startup Landscape in India

RBI’s Regulatory Moves and Startup Landscape in India

The Reserve Bank of India (RBI) has implemented stringent directives impacting the startup ecosystem, creating concerns among Venture Capital (VC) firms. The latest directive prohibits banks and Non-Banking Financial Companies (NBFCs) from investing in the same startups as VC funds. This measure aims to curtail loan evergreening through Alternative Investment Funds (AIFs) and could exacerbate the dwindling funding scenario for Indian startups.

RBI’s Card Tokenisation Expansion

Simultaneously, the RBI has expanded card tokenisation to encompass both debit and credit cards. Previously confined to merchant platforms, this extension enables individuals to tokenise cards via internet and mobile banking. To fortify digital transaction security, the circular stipulates that Card-on-File (CoF) tokens must acquire explicit customer consent and undergo Additional Factor of Authentication (AFA) validation. This move is anticipated to bolster digital transaction safety significantly.

Broader Challenges and December’s Funding for Startups

Beyond RBI interventions, the startup ecosystem faces additional hurdles. Concerns loom over a potential Telecom bill’s scope affecting major tech companies’ operations. Similarly, bureaucratic hindrances in Goa’s tourism industry pose growth impediments.

Despite regulatory challenges, December showcased promising funding activities for Indian startups. Ventures like Flipkart secured $600 million, and GreyOrange raised $135 million. However, this period also witnessed downsizing at unicorn startups ShareChat and Udaan alongside the RBI’s limitations on Alternative Investment Funds, marking a mixed month for the ecosystem.

VoM News Desk

VoM News is an online web portal in jammu Kashmir offers regional, National & global news.