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The fintech sector is considered as the backbone of the Indian startup ecosystem. The launch of UPI in 2016 followed by the demonetisation of INR 500 and INR 1,000 currency notes by the Narendra Modi-led NDA government, were watershed moments for the fintech sector in the country. 

Before that, the fintech sector relied on the traditional banking system, but demonetisation gave a push to digital payments and changed the game for the sector in the country.

The onset of the Covid-19 pandemic in 2020 gave a further boost to the fintech ecosystem, with startups in the sector witnessing a record increase in their customer base. This boom in the sector was also reflected in the annual remuneration of the founders of the top fintech startups in the financial year 2020-21 (FY21)

India has so far produced 106 unicorns, of which 22 are from the fintech sector alone. Last month, Pune-based OneCard achieved a billion-dollar valuation after raising $100 Mn in its Series D round from Temasek, Sequoia Capital, Matrix Partners, QED Holdings, among others. 

Bengaluru-based Razorpay is currently the most valued fintech startup at $7.5 Bn valuation and is also profitable as per its FY21 financials.  

The founders of the top fintech unicorns in India collectively took home around INR 150 Cr in salaries during FY21. As per Inc42’s calculations, the median salary of fintech unicorn founders stood at INR 1.19 Cr during the year.  

As per the filings of the startups with the Ministry of Corporate Affairs, Zerodha’s Kamath brothers – Nikhil and Nithin – took home the highest salary among fintech unicorns at INR 36 Cr each in FY21. 

It also must be noted that bootstrapped Zerodha reported the highest revenue among private limited startups at INR 2,729.6 Cr with a profit of INR 1,122.3 Cr in FY21.

BillDesk founders – Ajay Kaushal and Srinvasu MN – took home the second-highest salary of INR 25 Cr each in FY21. In 2021, BillDesk, one of the earliest payment gateways in India, was acquired by PayU for a record $4.7 Bn. 

The fintech unicorns in India are addressing multiple issues like providing a convenient and quick ways to transfer money, providing hassle-free credit, digitally opening bank account in a short time, among others.

Since 2014, the fintech sector is the second-highest funded sector in the country’s startup ecosystem after ecommerce. The sector received a total funding of $23.7 Bn between 2014 to H1 2022 across 1,223 deals. 

As per Inc42 analysis, there are 647 funded fintech startups in India. Between 2015 and 2022, the fintech sector also saw 101 mergers and acquisitions, including 27 in 2021.

While the fintech sector has seen phenomenal growth over the last few years in India, it is now under the scrutiny of the Reserve Bank of India (RBI). As the fintech ecosystem continues to grow, the central bank is looking at regulations for the sector to clamp down on any wrongdoings and clearly lay down the rules.

Recently, the RBI came out with its first set of guidelines for digital lenders to address the concerns around the business practices of some of the lenders. 

Earlier, the central bank also issued a notification barring non-bank prepaid payment instrument (PPIs) issuers from loading PPIs with credit lines. The move forced several fintech startups such as Uni Cards, and Slice to go back to the drawing board and come up with new products to abide with the central bank’s directions. 

As such, it is crucial for the fintech startups to find a way to operate and grow within the regulatory norms in the country to get a share of the fast-growing market. The fintech market in the country is expected to be a $1.3 Tn market opportunity by 2025, of which lendingtech and insuretech will account for 73%.