Fintech Brief — August 08, 2026

Lok Sabha Passes Bill Opening Door to UPI Merchant Charges

The Lok Sabha passed the Taxation and Other Laws (Amendment) Bill, 2026 on August 7, amending the Payment and Settlement Systems Act, 2007 to remove the legal bar that prohibited banks and payment service providers from levying charges on notified electronic payment modes — including UPI.

The amendment replaces Section 10A’s reference to Section 269SU of the Income Tax Act with a provision authorising the Central Government to notify specific electronic payment modes where charges may be permitted. Crucially, no MDR rate or implementation timeline has been announced yet — the Bill only creates the legal framework for a future decision.

Finance Minister Nirmala Sitharaman clarified that any future charges would apply to merchants, not users, and that an NPCI-headed steering committee is yet to finalise its recommendations. The Payments Council of India (PCI) backed the move, stating consumers and small merchants (including kirana stores) would remain exempt, while large retailers and online businesses could face MDR. The Bill was passed by voice vote without detailed discussion amid opposition disruptions.

Consumer angle: The zero-MDR regime that made UPI the world’s most successful real-time payment system is not dead yet — but the legislative gateway for future charges is now open. The real fight will be when (and if) the government issues its notification.

Sources: Lawbeat, Firstpost, Economic Times

RBI Expands Upper Layer NBFC List to 17 Entities for FY27

The Reserve Bank of India has expanded its Upper Layer NBFC classification to 17 entities for FY 2026-27, up from 15 previously. Four new public-sector entrants have been added: REC Ltd., Power Finance Corporation (PFC), Indian Railway Finance Corporation (IRFC), and Housing & Urban Development Corporation (HUDCO).

The revised criteria now require NBFCs with assets under management of at least ₹1 lakh crore to qualify for consideration. Tata Sons remains in the Upper Layer, though its pending application for NBFC de-registration is still under examination. Upper Layer classification brings enhanced supervision and stricter regulatory requirements under RBI’s scale-based framework — including higher capital buffers, board governance norms, and internal audit standards.

Why it matters: The expansion signals RBI’s tightening grip on systemic risk in the NBFC sector. These four government-backed financial institutions collectively manage hundreds of thousands of crores in assets, and their inclusion means significantly more regulatory scrutiny going forward.

Source: Current Affairs Adda247

Indian Startup Ecosystem Sees Sharp Funding Rebound — $323 Million Across 25 Deals

The first week of August saw a sharp recovery in Indian startup funding, with $323 million raised across 25 deals — a dramatic jump from $67 million the previous week. The standout deal was EV startup River Mobility’s $120 million raise. Other notable raises:

  • InRisk Labs (insuretech): $27 million from Bessemer Venture Partners and Northpoint Capital
  • BlissClub (athleisure): ₹160 crore (~$16.8M) from Singularity AMC, Vidit Aatrey (Meesho co-founder), Elevation Capital, and Eight Roads Ventures
  • HomeRun (quick commerce): $12 million from Nexus Venture Partners and others
  • GetVantage (revenue-based financing): ₹63 crore (~$6.6M) from Chiratae Ventures, Varanium Fintech Fund, and others

Meanwhile, global fintech funding data for Q2 2026 shows India entering the top three with 65 deals and a 5% global share, displacing Canada.

Source: YourStory

CEA Nageswaran Cautions on AI Safety in Finance; ASSOCHAM Fintech Festival Concludes

At the concluding day of the 3rd India International Fintech Festival (August 6-7, New Delhi), Chief Economic Adviser V. Anantha Nageswaran warned that India must take a proactive approach to AI safety in the financial sector rather than waiting for risks to materialise. An ASSOCHAM-KPMG report released at the festival projected AI could become the “intelligence layer” of India’s financial ecosystem.

Union Minister for Science & Technology Dr. Jitendra Singh stated that after becoming a global leader in digital payments, India should aspire to move from digital payments to digital prosperity. The festival, themed around building profitable and trusted digital finance, saw participation from NPCI, Google, Paytm, Perfios, and Amazon India.

Consumer angle: As AI gets embedded into lending, payments, and investment advisory, the regulatory framework for algorithmic accountability in finance remains a work in progress. The CEA’s warning is timely — India’s fintech adoption rate of 87% (vs. 67% global average) means any AI-driven failure would affect hundreds of millions.

Sources: The Statesman, ASSOCHAM, Outlook Business