India: fintech & payments regulation

Who regulates

• Securities and Exchange Board of India (SEBI)

  Primary regulator for securities market intermediaries, stock brokers, portfolio managers, and investment advisers as detailed in the source documents.

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• Reserve Bank of India (RBI)

  Primary regulator for payment systems, payment aggregators, and wallets under the Payment and Settlement Systems Act, 2007. Not explicitly detailed in the provided SEBI-centric documents.

Core laws & rules

• SEBI (Stock Brokers) Regulations, 2026 (2026)

  Consolidates regulatory requirements for the registration, operation, and conduct of stock brokers and clearing members.

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• SEBI (Investment Advisers) Regulations, 2013 (2013)

  Mandates registration for entities providing investment advice for consideration, establishing eligibility and compliance criteria.

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• Payment and Settlement Systems Act, 2007 (2007)

  The core legislation governing payment systems in India, under which the RBI regulates payment aggregators and wallets.

Licensing & registration

• Stock Broker / Clearing Member

  Registration required under SEBI (Stock Brokers) Regulations, 2026. Standardized application forms and certificates are mandated.

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• Investment Adviser

  Registration required for providing investment advice for consideration. Amendments in 2025 allow security deposits in liquid/overnight mutual funds.

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• Portfolio Manager

  Registration required under SEBI (Portfolio Managers) Regulations, 2020. Strict eligibility criteria including net worth and professional qualifications.

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• Payment Aggregator / Wallet

  Requires RBI authorization under the Payment and Settlement Systems Act, 2007. Specific capital and operational requirements are set by RBI guidelines.

Restrictions & warnings

• SEBI-registered intermediaries must use standardized, validated UPI IDs ending in @valid for collecting funds from investors, discontinuing old IDs by October 1, 2025.

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• Retail investors participating in algorithmic trading must do so through stock brokers acting as principals, with strict API security and phased compliance milestones.

• Custodians must maintain a minimum net worth of INR 75 crore, increased from INR 50 crore under 2025 amendments.

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Direction of travel

• SEBI is simplifying compliance for foreign investors through the SWAGAT-FI framework and easing operational burdens for Alternative Investment Funds (AIFs) by allowing migration to Accredited Investor-only schemes.

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• Regulatory focus remains on enhancing investor protection in digital trading (algorithmic trading) and ensuring robust system audits for stock brokers through technology-based monitoring.

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Sources

1. Circular on Forms for registration of stock brokers and clearing members · 2026-02-17
2. Securities and Exchange Board of India (Stock Brokers) Regulations, 2026 · 2026-01-08
3. Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992 · 2025-12-24
4. Securities and Exchange Board of India (Intermediaries) Regulations, 2008 · 2025-12-24
5. Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 · 2025-11-25
6. Use of Liquid and Overnight Mutual Funds for Deposit Compliance by Investment Advisers and Research Analysts · 2025-08-12
7. Securities and Exchange Board of India (Portfolio Managers) Regulations, 2020 · 2025-09-03
8. Adoption of Standardised, Validated and Exclusive UPI IDs for Payment Collection by SEBI Registered Intermediaries from Investors · 2025-06-11
9. Securities and Exchange Board of India (Custodian) Regulations, 1996 · 2025-09-23
10. SEBI SWAGAT-FI Framework for FPIs and FVCIs · 2026-01-16
11. Modalities for Migration to AI Only Schemes and Relaxations for Large Value Funds under SEBI AIF Regulations · 2025-12-08
12. Framework for Monitoring and Supervision of System Audit of Stock Brokers through Technology based Measures · 2025-01-31