![]() “We believe this regulation could significantly impact the fintechs involved in this business and would be advantageous to banks, as they can further accelerate card acquisition with less competition,” analysts at brokerage house Macquarie wrote earlier this week. The new rule is said to be impacting not just such shark lenders and sketchy players, but everyone. With the PPI + BNPL combo, the PPI route is now being used as an alternative to credit cards or offer seamless BNPL, which RBI may not be okay with as of today," said an industry player, who also requested anonymity. "Some people are speculating that when the PPI licenses were given, RBI was clear that they are not given as credit instruments. Some of these firms, the government agencies have claimed over the past two years, may be engaging in money laundering schemes. The central bank, which didn't offer an explanation in the notice this week, has long expressed concerns about lenders who are charging exorbitant interest rate and requiring minimum know-your-customer details to onboard and coerce customers. This content is not available due to your privacy preferences. The founder added that this new stance risks erasing all the innovation that has happened in the past five years in the fintech industry, which has attracted over $15 billion in investments in the last two years from scores of high-profile backers including Sequoia India and Southeast Asia, Tiger Global, Insight Partners, Accel and Lightspeed Venture Partners. ![]() You're saying now that NBFCs can't give credit lines to merchants and their money should only be routed to bank accounts of customers." The way things work with PPI currently is that the money finally goes to merchants. "What the RBI is essentially saying here is don't load credit line on PPI. "The rule is very confusing and strange," said a fintech founder on condition of anonymity to avoid upsetting RBI officials. Amazon Pay, Paytm Postpaid and Ola Money are cautious, too, because many believe that they might be impacted as well. The central bank’s notice, which doesn’t identify any startup by name, is widely thought to be impacting just about everyone including buy now, pay later firms that also use a similar mechanic to offer loans to customers. Fintechs typically partner with banks to issue cards and then tie up with non-banking financial institutions or use their own NBFC unit to offer credit lines to consumers. Several startups including Slice, Jupiter, Uni and KreditBee have long used the PPI licenses to issue cards and then equip them with credit lines.
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