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The Indian fintech startup ecosystem secured $778 million in funding in the July-September period, reaching second spot globally after the US in terms of fintech funding raised in the third quarter, according to a report on Tuesday. 

This growth can be credited to government initiatives such as the promotion of digital payments through UPI, with over 14 billion transactions processed in May, the JAM-Trinity initiative integrating Aadhaar with bank accounts and mobile numbers, and the allocation of Rs 2,600 crore in incentives to support fintech startups.

This also marks a 66 per cent increase from the $471 million raised in Q3 last year and an impressive 165 per cent surge from the $293 million raised in Q2 this year, according to the report by Tracxn, a SaaS-based market intelligence platform.

The third quarter also saw two startups attaining IPO status along with one company turning unicorn.

“The resurgence in funding for the Indian fintech industry signifies a pivotal moment in our journey towards becoming a global fintech hub,” said Neha Singh, Co-founder of Tracxn.

With rising digital adoption and supportive government policies, we are positioned for sustained growth, she added.

According to the report, India now ranks fourth in all-time funding for the fintech sector, following the US, China and the UK.

The top-performing sectors included alternative lending, investment tech and payments. The alternative lending segment raised $517 million, a 49 per cent increase from $348 million in Q3 2023 and 199 per cent growth from $173 million in Q2 2024.

Investment tech secured $109 million in Q3 2024, reflecting a 58 per cent decline from $257 million in Q3 2023, but a significant 356 per cent surge from $23.9 million in Q2 2024.

In September, lending management platform Moneyview achieved unicorn status. Peak XV Partners, Y Combinator, and Lets Venture emerged as the top investors in the fintech space.