With the regulatory lens on the fintech sector, many companies are understood to be reviewing strategies to ensure they meet guidelines.
According to industry sources, many are also awaiting the Reserve Bank of India’s report on digital lending before finalising their expansion plans. The report and the guidelines are expected soon, the sources said.
“Payments and lending are the two focus areas for most fintech firms. Many plan to wait for the RBI’s guidelines on digital lending to ensure they work within the permitted structure,” one of them said, adding that companies have put on hold digital lending plans for now.
The RBI had in November 2021 released the report of the working group on digital lending norms and sought comments from stakeholders and the public.
Meanwhile, several neo-banking platforms are also looking to present themselves as holistic financial platforms to ensure they remain transparent with customers and do not get on the wrong side of the guidelines.
“The RBI has been looking at the sector closely to understand the innovations and issues. In recent months, there have also been interactions of fintech players with the RBI,” said the head of a fintech company.
Industry sources point out that the RBI’s recent directive asking non-bank prepaid payment instrument (PPI) issuers not load their wallets and cards from credit lines came as a reality check for many.
“Fintech players are hoping that the RBI will provide some clarification on what happens next, especially to segments like ‘buy now, pay later’,” said another source, adding that industry bodies have been working on the issue.
The Financial Stability Report of the RBI had highlighted that big techs can scale up rapidly and pose risk to financial stability.