In a recent tweet, Pravin Jadhav, founder and CEO of Raise Financial Services and former CEO of Paytm Money, shared a crucial insight for Indian fintech startups. Jadhav emphasized that for financial services startups targeting Indian consumers and subject to local regulations, there’s no benefit in registering the venture outside India while operating domestically.
What Happened? He noted that although some large startups initially chose to register abroad, the scenario has evolved. Now, with ample capital available for Indian fintech startups, the trend is shifting towards domestic registration.
This perspective gains relevance in light of Razorpay’s current strategy. The digital payments platform is planning to relocate its parent company to India through a cross-country merger, a move that could incur a substantial tax payment in the US, where it’s currently domiciled. This strategic shift, partly driven by tighter fintech regulations, is a significant step for Razorpay, which has been valued at around $7.5 billion.
Why shift? Razorpay’s decision to domicile in India aligns with its long-term goals, including a potential listing on Indian stock exchanges. The process, however, involves complex legal and financial considerations, including a hefty tax liability and the need for regulatory approvals.
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Similarly, wealth management platform Groww is undertaking a parallel move, seeking a cross-country merger between its Indian and US entities. This trend reflects a growing preference among Indian fintech firms to align more closely with domestic regulations and market dynamics, underscoring the evolving landscape of the Indian fintech sector.
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