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RBI reluctant to hand out NBFC licences to fintechs
November 30, 2022
PhonePe, Razorpay, BharatPe, , OkCredit and NiYo which operates as neo-bank, are among the well-known names who had approached the banking regulator for NBFC licence, but their requests have been turned down.
Fintechs are now making representations through the industry bodies to clear the path for secure licenses. “We are in touch with the RBI on this matter,” said Ram Rastogi, Chairman, Fintech Association for Consumer Empowerment (FACE).
However, sources say that RBI has put the matter on hold for now. “It (RBI) has become a bit liberal in considering NBFC PA/PG (payment aggregator/ payment gateway) licences, but a generic NBFC licence still seems to be a no-go zone,” said a source. Issues relating to ownership of fintechs, especially pertaining to origin of capital flowing into these companies is one of the main concerns for the regulator.
“The colour of money flowing into these companies is highly questionable as its often through tax havens and to be in the lending business, such an ownership structure won’t work,” said another highly placed source. The practice of charging exorbitant rate of interest is another big deterrent for the RBI to permit fintechs in the lending arena.
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