India–New Zealand FTA: What financial services deal cover and how it opens doors for fintechs

India and New Zealand have concluded negotiations on a dedicated Financial Services Annex under their proposed free trade agreement (FTA).

The annex, finalised on December 22 after talks that began in May, contains 18 articles and is designed to sit within the FTA’s Trade in Services chapter.

According to the finance ministry, the agreed text goes beyond standard commitments under the WTO’s General Agreement on Trade in Services (GATS) by setting clearer rules for market access, regulatory cooperation and new-age financial services, according to the government.

Focus on digital payments and fintech

A key feature of the annex is cooperation on electronic payments and real-time transaction infrastructure. India and New Zealand have agreed to work towards interoperability between domestic payment systems and to support real-time cross-border remittances and merchant payments through fast payment systems.

This is expected to create opportunities for Indian payment service providers to expand overseas, leveraging India’s expertise in digital public infrastructure and real-time payments.

The ministry also sees the provision as a way to improve remittance flows, particularly from the Indian diaspora.

The annex also includes commitments on fintech cooperation, with both sides agreeing to learn from each other’s regulatory sandbox and digital sandbox frameworks. This is expected to encourage cross-border experimentation, regulatory learning and collaboration, and support India’s ambition to position itself as a regional fintech hub.

Data protection and regulatory autonomy

The two countries have recognised each other’s right to maintain laws and regulations governing the transfer, processing and storage of financial information. The aim is to facilitate cross-border digital operations by financial service suppliers while ensuring complete regulatory control over data sovereignty and consumer privacy protections.

Non-discrimination and market access

The deal provides for non-discriminatory treatment of Indian financial institutions in New Zealand, including safeguards against arbitrary credit assessments. It also supports back-office and support services, allowing financial institutions to centralise operations in India, leveraging its strengths in information technology and business process outsourcing.

Banking, insurance and investment commitments

India has offered higher foreign direct investment limits in banking and insurance and a more liberal bank branch licensing regime, permitting up to 15 branches over four years.

At present, only Bank of Baroda and Bank of India operate subsidiaries in New Zealand with a combined four branches. New Zealand does not currently have a banking or insurance presence in India, and Indian insurers have yet to establish operations in New Zealand.

“This FTA, by establishing clear market access commitments, regulatory transparency and bilateral cooperation frameworks, will facilitate increased bilateral investment, institutional presence and services delivery,” the ministry said.

“The agreement will serve as an important catalyst for broadening India's financial services presence in New Zealand and welcoming New Zealand financial institutions to India's growing and dynamic financial services markets,” it added.