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RBI reluctant to hand out NBFC licence to fintechs -Hamsini Karthik

-The Hindu Business Line

PhonePe - ZestMoney deal to set precedence for fintechs to explore backdoor entry into the lending business 

Despite three months of engagement and continued discussions with the banking regulator, fintechs may not have cracked the code yet to operate as non-bank lenders. Highly placed sources say the Reserve Bank of India is reluctant to issue non-bank finance company or NBFC licences to fintechs.

PhonePe, Razorpay, BharatPe, Khatabook, 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.

Secure licenses

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.

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