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Explainer: Regulating Fintechs | The Financial Express



By Shashank Didmishe

RBI has disallowed non-bank pre-paid devices (PPI) to be loaded via credit score traces. The rule seems to be geared toward reining in lending exercise by fintechs through NBFCs and doubtless stems from issues systemic threat may construct up, experiences Shashank Didmishe.

Some new technology gamers have acquired near 200–300k playing cards utilizing PPI licences and loading the wallets of customers utilizing credit score traces from NBFCs and banks. The regulator seems to be displeased that PPI licences are being utilised to disburse loans quite than to route funds. Moreover, it appears involved that NBFC cash is getting used to load client wallets. However, it’s snug with wallets being loaded by a bank card or a debit card or money. Given the latest disaster within the NBFC area, with a number of gamers having gone belly-up, the priority is justified. The pointers may impression gamers like Slice and Unicards.

Banks which have massive bank card portfolios stand to achieve if the RBI continues to toughen its stand in opposition to fintechs and discourages them from accessing NBFC funds.

If RBI is sad solely about NBFC credit score traces being loaded onto wallets however just isn’t averse to financial institution credit score being loaded, NBFCs could must route funds through banks.

Some prospects have probably been utilizing a line of credit score, via their wallets, with out truly figuring out it. Such surreptitious lending has clearly not gone down with the RBI. Although the quantities loaded on to the wallets will not be important, the central financial institution is clearly nervous about systemic threat.

Some wallets have been providing their providers to NBFCs to ease disbursements of gold loans, private loans and microfinance loans to scale back the utilization of money, say trade insiders. App-based bank card suppliers which might be utilizing wallets to difficulty credit score traces pay lenders a payment and earn an interchange of 1.5%.



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