Fintech Brief — August 28, 2026

RBI Eases Dollar Deposit Swap Rules Ahead of August 31 Deadline

The Reserve Bank of India has given banks greater flexibility in swapping overseas dollar deposits, just days before the August 31 deadline for its special FCNR(B) deposit scheme. The move addresses a practical problem: a surge in dollar inflows under the scheme was leaving banks with excess dollar balances they had to roll over in the overnight swap market until their designated swap day with the RBI.

This is part of the central bank’s broader push to strengthen foreign-exchange buffers — forex reserves had climbed to $716.9 billion (a six-month high) as of August 14, with the capital-flow measures announced in June having drawn in $40.81 billion so far. ¹

The timing matters. With the Iran war pressuring oil prices and the rupee remaining vulnerable, the RBI is pulling every lever available to build a dollar cushion. The August 31 deadline for the special deposit scheme will test whether these inflows can be sustained beyond the concessional hedging window.

PhonePe Nears 11 Billion Monthly UPI Transactions in July

PhonePe continued to dominate India’s UPI ecosystem, processing nearly 11 billion transactions in July, according to NPCI data. The platform’s market share in transaction volume remains north of 48%, with Paytm holding third position at 1.90 billion transactions (8.05% volume share) and Navi fourth at 947 million (4%). ²

CRED slipped to 10th rank in UPI transaction volumes — a notable decline for a platform that had been climbing the ranks through its payment features. The UPI ecosystem overall continues to grow, but the concentration at the top remains stark.

Federal Bank Partners M2P Fintech for Digital Lending Overhaul

Federal Bank has tapped domestic fintech M2P Fintech to build a new loan origination system, signalling a deeper push into digital lending. The partnership aims to streamline the bank’s end-to-end lending workflow — from application processing to disbursement — using M2P’s banking infrastructure platform. ³

Bank-fintech partnerships for core lending infrastructure are becoming the preferred route for mid-sized banks looking to scale digital credit without building everything in-house. M2P, which has been expanding its banking client base, already powers card issuance and payment solutions for multiple Indian banks.

August Startup Funding Recovers to $960 Million; Fintech Leads

After a 38% drop in July, Indian startup funding rebounded in August to approximately $961 million across 100 deals, according to Entrackr’s monthly funding report. Fintech emerged as the top-funded sector, followed by e-commerce and healthtech. Growth and late-stage deals accounted for $733 million across 24 rounds. ⁴

Mumbai led city-wise funding with $410 million across 15 deals, while Bengaluru followed at $178 million. The broader trend: investors are returning to growth-stage deals but remain selective, with AI and fintech continuing to attract the bulk of capital.