By Shashank Didmishe
RBI has disallowed non-bank pre-paid devices (PPI) to be loaded by way of credit score traces. The rule seems to be aimed toward reining in lending exercise by fintechs through NBFCs and possibly stems from issues systemic threat may construct up, reviews 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 somewhat than to route funds. Moreover, it appears involved that NBFC cash is getting used to load shopper wallets. However, it’s comfy with wallets being loaded by a bank card or a debit card or money. Given the latest disaster within the NBFC house, with a number of gamers having gone belly-up, the priority is justified. The tips may affect gamers like Slice and Unicards.
Banks which have massive bank card portfolios stand to realize 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 shouldn’t be averse to financial institution credit score being loaded, NBFCs might must route funds through banks.
Some clients have presumably been utilizing a line of credit score, by way of their wallets, with out really understanding it. Such surreptitious lending has clearly not gone down with the RBI. Although the quantities loaded on to the wallets is probably not important, the central financial institution is clearly frightened about systemic threat.
Some wallets have been providing their providers to NBFCs to ease disbursements of gold loans, private loans and microfinance loans to cut back the utilization of money, say business insiders. App-based bank card suppliers which are utilizing wallets to concern credit score traces pay lenders a charge and earn an interchange of 1.5%.