The Cross-Regulator Problem
Embedded credit platforms operate at the intersection of lending, payments, and merchant commerce. As they expand into new products and use cases, a single model can fall within more than one regulator’s framework. The challenge is to understand how these frameworks interact and how a product can be structured when there is no clear regulatory precedent.
Our Framework
Ikigai Law helps embedded credit platforms adapt to changes in RBI’s lending framework. As they expand into new products, we work to protect customer experience and commercial viability alongside compliance. Where a product falls under more than one financial sector regulator’s framework, we assess how the relevant regulators are likely to view the model and help structure it accordingly.
Applying it in Practice
We are the long-standing counsel to a fintech that offers embedded credit at the point of sale. Recently, we advised the platform on using its buy-now-pay-later (BNPL) infrastructure to finance insurance premiums, a product that raised questions under both the RBI and IRDAI frameworks.
We also support the platform’s partnerships with lenders, payment companies and other ecosystem participants. This includes advising on the commercial and contractual arrangements that underpin these partnerships and representing the platform in negotiations with larger regulated institutions. The Ikigai Law team on this matter comprised of Aparajita Srivastava, Astha Srivastava and Abhigyan Tripathi.
“The most interesting fintech products today are built at the edges of existing regulatory frameworks, using established infrastructure for a purpose it was never designed for. In these situations, legal advice has a bigger role to play than simply flagging the uncertainty. It means understanding what each regulator actually cares about and helping the business find a structure that works in practice.”
— Aparajita Srivastava, Partner (Fintech)
Image credits: AI-generated
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