Impact of India’s 2024 Patent Rules Amendments on AI-Driven Licensing Agreements in the FinTech Sector

India’s fintech scene is booming. From digital payments to automated lending and personalized wealth management, AI sits at the center of today’s innovation. In March 2024 the government introduced the Patents (Amendment) Rules, 2024, which aimed to make the patent system faster and more applicant-friendly. That change matters for AI developers and the banks that license their tools.

Understanding the 2024 Patent Rules Amendments

The key changes took effect on 15 March 2024. Most important is a shorter timetable for examination: applicants now face a 31-month window to seek examination, instead of the previous 48 months in many cases. That shorter timeline speeds up the path from filing to grant and reduces the risk that fast-moving AI products will become obsolete before protection is secured.

Other practical fixes reduce routine burdens. Applicants no longer must file frequent ad-hoc updates about foreign filings; instead, the controller can request such information, and updates need only be made every six months when asked. Annual working statements were relaxed to a three-year cycle, easing paperwork for firms that must report how patents are used commercially. Divisional applications are now easier to file, and grace periods for renewals provide more breathing room for patentees.

Taken together, these amendments bring India’s patent process closer to global practices and remove administrative friction that once delayed commercialization. For AI innovators in fintech, where speed to market matters, these procedural changes matter.

How the Amendments Accelerate AI IP Licensing in FinTech

Faster, clearer patenting helps licensing in two ways. First, it raises the commercial value of AI by shortening the time during which rights are uncertain. When patents grant sooner, startups and inventors gain stronger bargaining positions and can strike licensing deals with banks and financial platforms more quickly. Second, reduced reporting and renewal burdens lower transaction costs for small firms, making it easier for them to participate in licensing markets.

The fintech sector in India is projected to grow substantially in the coming decade, and AI powers many of its core uses – credit scoring, fraud detection, chatbots, and personalized services. The 2024 Rules make it less risky for startups to patent such AI tools and then license them to larger firms. That dynamic encourages both domestic collaboration and foreign interest in licensing deals.

Case Studies from 2025 Deals, Involving Banks and Startups

Three possible licensing cases are presented here between banks and AI startups where the IP procedures are expedited.

First, a partnership of the Bajaj Finance and a Mumbai-based artificial intelligence company (startup) to develop GenAI bots. Early in 2025 Bajaj licensed a generative AI customer-service bot from a local startup. The startup’s patent was granted quickly under the new regime, completed within a year, and the licensing deal was valued at around ₹150 crore per year. The faster patenting process helped the startup negotiate confidently and embed the AI into Bajaj’s app for real-time query handling.

Second, Tata Capital tie-up with an AI fintech startup, in Bengaluru. Tata Capital licensed a patented AI-driven credit scoring model that delivered a 20% reduction in lending costs in Q1 2025. The patent had been filed under the relaxed disclosure rules and was granted swiftly, which meant the system could be licensed without legal uncertainty. The tool processed over 1.2 million loan applications within six months, expanding Tata Capital’s reach into rural areas where traditional credit checks were limited.

Third, CAMS (Computer Age Management Services) introduced CAMSAi developed by Gnani.ai, one of the voice AI startups chosen as a part of AI mission. The model, built on more than 15 billion parameters, was licensed to several major banks including HDFC, where it was applied to KYC and transaction-monitoring. Within the first quarter of deployment, the system handled over 25 million transactions, cutting processing times by 40% and reducing compliance errors by 15%.

Industry surveys showed that by the end of 2025, AI licensing volumes in fintech had grown by around 25% year-on-year, compared to an average growth rate of under 10% before the amendments. The clear link between faster, more predictable patents and higher licensing activity underlines how the reforms are reshaping the fintech landscape.

Critically Evaluating Risks: Over-Reliance on “Technical Effect” Criteria

The amendments improve procedure, but they do not change the substantive threshold for patentability in India. AI inventions still must show a “technical effect” rather than being treated as mere algorithms or business methods. That requirement can be a choke point for fintech AI, which often blends software, data modeling, and business logic.

When examiners apply the technical-effect test strictly, some AI patents risk rejection. Startups that build fraud detectors, scoring engines, or language models may find it hard to frame their inventions as solving a technical problem rather than a business one. Several startups have faced denials in 2025 and appeals are costly. Compared to the U.S. “Alice” test which is more flexible, highlights that different jurisdictions take varying stances on software-related inventions however this can be an issue given, India’s approach can feel less flexible to AI developers and potential licensees and foreign licensors.

Comparing Pre- and Post-Amendment Enforcement Challenges for Foreign Licensors

Before the 2024 Rules, foreign licensors confronting India faced long waits for grants, sometimes years, plus heavy reporting and limited remedies. The new rules shorten grant timelines and ease compliance burdens (for example, the move to three-year working statements and more flexible disclosure requirements), making entry easier.

But enforcement remains an issue. India lacks specialized IP courts in many places, and infringement suits can still be lengthy and expensive. Disclosure concerns, such as the risk of leaks or weak protection of confidential data, continue to worry foreign firms. In short, the front door to India has been widened by the amendments, but the legal system’s capacity to provide fast, predictable enforcement has not been fully transformed.

Conclusion

The Patents (Amendment) Rules, 2024, changed the rhythm of India’s patent system in ways that matter for AI licensing in fintech. By cutting timelines, easing formalities, and making divisional filings and renewals more flexible, the Rules reduced friction for startups and made licensing with banks faster and more practical. The 2025 deals – Bajaj Finance, Tata Capital, and CAMS, illustrate how quicker patenting can translate into real business outcomes.

At the same time, substantive patentability requirements, especially the technical-effect test, remain a barrier for some AI inventions, and enforcement and judicial capacity still lag behind procedural gains. Policymakers and industry must therefore balance faster grants with clearer guidance on technical effect and continued improvements in dispute resolution. If India addresses those follow-up issues, the country can strengthen its position as a hub for AI-driven fintech licensing; for now, the 2024 Rules mark important progress, not a finished reform.

Author: Amrita Pradhan, in case of any queries please contact/write back to us via email to [email protected] or at IIPRD. 

References

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