The note came after a central bank directive last month barring prepaid payment instruments (PPIs) from being loaded with credit lines
sent fintech firms into a tizzy.
While industry associations are seeking further clarity on the matter, Bengaluru-based Slice and Uni Cards are likely to be hit the hardest by RBI‘s circular.
“Today, we are very well capitalised, our credit risk numbers are one of the best globally and our word-of-mouth customer acquisition is stronger than anyone else in our space,” Rajan said in the note.
ET has reviewed a copy of the note.
“Their (RBI) main purpose is always to serve the Indian citizens better. At Slice, our whole basis of existence is providing world-class customer experience in India. There’s a huge overlap in our objective with that of RBI’s. We are committed to complying with an ever-expanding set of laws and regulations, as well as upholding the highest standards of governance and ethical business conduct,” Bajaj wrote in the email.
Discover the stories of your interest
“This environment demands that every team member and leader be committed to regulatory excellence. I am confident that as long as we operate with integrity, customer focus, and transparency, we will in this phase and, hopefully, the sector will become even healthier. That’s what we need to focus on!”
In May, Slice said it was
shifting its focus to the Unified Payments Interface (UPI) digital railroad as well as other payment methods on its app as it sought to diversify from just a card-based credit line business.
ET reported on June 23 that
RBI’s communication on PPIs had the backing of the government and had come after commercial lenders raised concerns over alleged flouting of rules by fintech companies.
These concerns included slackened know your customer (KYC) norms and breaches in anti-money laundering (AML) guidelines by the fintech firms, ET reported citing sources.
After the order, the fintech industry began consultations with the RBI seeking greater clarity on the communication. Industry body Payments Council of India (PCI) also made a
joint representation to the government on the matter.
In its letter, PCI said wallets that comply fully with know your customer (KYC) norms should be treated on par with bank accounts, and that they should be allowed to disburse credit.
The RBI’s recent move against credit lines has caused disruption among digital lending and card-based fintech firms, with the industry continuing to reach out to the central bank for consultations.
Fintech firms such as Jupiter, EarlySalary and KreditBee have also temporarily stopped customers from making any transactions on their prepaid cards,
ET reported on June 23 citing sources.
Players such as Slice and Uni have slowed down issuances of new credit cards as the regulatory uncertainty continues, the sources added.
More recently, PayU’s lending arm LazyPay also
updated its terms and conditions to comply with the RBI directive.
ET was the first to report on July 5 that it had also temporarily disabled support for buy-now-pay-later (BNPL) payment product LazyPlus UPI for its existing user base, amid rising regulatory concerns for card-based credit fintech firms.
Sources told ET that the company was looking to relaunch its credit card ‘LazyPay Card’ as a credit card, instead of a prepaid offering and reissue them to the customers to comply with the RBI directive.
