Abstract

Financial literacy is the skill that helps people make proper decisions related  to financial products and services. Financial inclusion can be defined as access of these services to individuals and even businesses. Financial literacy is the foundation of financial inclusion and both are interconnected to each other. In the contemporary world, the fintech industry is playing a crucial role in promoting financial inclusion. Despite the progress fintech is making, it has its own challenges. Few of the challenges include working through regulations, cybersecurity concerns, and barriers of adoption by marginalised communities. This paper discusses the Indian regulatory framework for the fintech industries and compares it with some global frameworks. The regulations include frameworks for consumer protection and digital identity systems. This paper recommends provisions for enhanced fintech adoption such as improved digital infrastructure, enhanced consumer protection, focused on financial and digital literacy, and inviting fintech solutions catering to social impact. The recommendations, if implemented through proper policies and legal frameworks, may contribute to a more inclusive and sustainable financial ecosystem in India, by addressing these issues.

Introduction 

According to a report by BCG Global, India’s fintech sector has experienced a significant growth and has established itself as the third largest in the world. Fintech, in simpler terms, is a combination of finance and technology. It has created new ways through which people can handle their monetary assets and access financial services.  It includes a wide variety of services such as digital payments, digital wallets, online lending, wealth management, insurance and blockchain based solutions. Fintech has completely transformed the traditional financial practices and made the services faster, more affordable and user friendly. In the past three years from 2021 to 2024, fintech companies in India have grown by nearly five times, from 2,100 fintech startups to 10,200. Between the years 2014–23, Indian fintech companies have raised $ 28 billion across 1,486 deals, with about $ 4.3 billion from Initial Public Offerings (IPOs). India has made various advancements in digital finance through its quick financial progress boosted by online payments, loans, investments, and insurtech solutions. The fintech revolution has improved service delivery methods and created  unique possibilities for better financial education and broader access.  Moreover, fintech has helped the marginalised communities to use and transact as citizens of a modern economy. This ranges from microloans to digital payments and insurance. Initiatives like India Stack, Aadhaar based payment systems, along with regulatory support from Reserve Bank of India (RBI) fuel this transformation.

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