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Fintech firms’ NBFC co-lending biz under stress after RBI action

Economic Times

Economic Times · 9m ago

Fintech firms’ NBFC co-lending biz under stress after RBI action

Fintech firms relying on co-lending partnerships with non-banking finance companies (NBFCs) could face more stress after the Reserve Bank of India's recent action on Navi and DMI Finance. Fintechs charge higher interest rates and serve sub-prime customers, offering unsecured credit. With the RBI raising concerns about usurious interest rates, fintech platforms may need to adjust their models. Co-lending is a significant growth driver for fintechs, but large NBFCs could reconsider these arrangements in light of the RBI's action. The regulator's scrutiny of systemically important NBFCs and co-lending arrangements indicates increased risks for the sector.

Related News

P2P startups look to overhaul biz, processes amidst RBI crackdown

Economic Times

Economic Times · 9m ago

P2P startups look to overhaul biz, processes amidst RBI crackdown

Peer-to-peer lending startups in India are making changes to their operations in order to comply with regulations from the Reserve Bank of India (RBI). Fintech platform Mobikwik is now processing all withdrawals on the 12th of each month and crediting them to investors' bank accounts within three working days. Other platforms, such as BharatPe and Cred, have halted their P2P lending products, while Faircent has shifted towards offline channels and working with investment advisors. The RBI has taken action against companies that violated P2P lending rules, with fines of around Rs 1.9 crore ($258,250) issued to Liquiloans and Lendenclub.

Asset quality stress in MFI sector expected to persist in H1 FY26: Report

Economic Times

Economic Times · 24d ago

Asset quality stress in MFI sector expected to persist in H1 FY26: Report

The NBFC-MFI sector faced significant asset quality stress in FY2025, with borrower overleveraging and operational challenges causing a surge. Asset quality issues led to a decline in the assets under management (AUM) by 12%. The stress is expected to persist through the first half of FY2026, according to an ICRA report. However, a recent RBI directive aims to improve NBFC-MFIs' credit risk profile and loan diversity by adjusting qualifying asset criteria.

RBI Flags High Delinquency Levels For Fintech Lenders In Below INR 50K Loan Category

Inc42 · 1y ago

RBI Flags High Delinquency Levels For Fintech Lenders In Below INR 50K Loan Category

Non-banking financial company (NBFC) fintech lenders have the largest share in sanctioned and outstanding amounts for loans under INR 50,000, but also have the second highest delinquency levels, according to the Reserve Bank of India (RBI). The RBI warns that unsecured lending needs strict monitoring, as over half of borrowers in the personal loans category have three active loans at origination. Additionally, the RBI's decision to increase risk weight for certain consumer credit segments has slowed down the growth rate for consumer credit.

Now, RBI Tightens Noose Around P2P Lenders

Inc42 · 1y ago

Now, RBI Tightens Noose Around P2P Lenders

The Reserve Bank of India (RBI) is reportedly increasing its scrutiny of peer-to-peer (P2P) lending platforms due to breaches of regulatory norms, including Know Your Customer (KYC) guidelines. The central bank has requested details such as onboarding procedures, customer profiles, and IT infrastructure from P2P platforms. RBI aims to address concerns regarding risk mitigation and compliance. This comes after RBI cracked down on card networks recently. The central bank has been closely monitoring fintech platforms and NBFC-P2Ps before, and further actions are expected to enforce regulatory guidelines.

RBI Vs Fintech Startups Redux: Action Against Navi, DMI Finance Revives Debate

Inc42 · 9m ago

RBI Vs Fintech Startups Redux: Action Against Navi, DMI Finance Revives Debate

The recent action by the RBI against non-banking financial companies (NBFC) has raised concerns for fintech startups about the need to navigate regulatory requirements. The RBI found that the pricing policies of these NBFCs were not in line with regulations, leading to questions about compliance burdens for startups. Fintech founders are feeling defeated as they must constantly keep up with regulators. The issue of balancing innovation with regulatory compliance remains a challenge for fintech startups.

Central bank bars P2P startups from giving default loss guarantee in tie-ups with NBFCs

Economic Times

Economic Times · 1y ago

Central bank bars P2P startups from giving default loss guarantee in tie-ups with NBFCs

The Reserve Bank of India (RBI) has issued a directive stating that peer-to-peer lending platforms cannot offer default loss guarantees (DLG) to investors. This move further intensifies the scrutiny on the digital lending sector. The RBI's decision is expected to impact P2P platforms that relied on affiliates to source customers. The regulator clarified that DLG is not permitted on loans arranged on NBFC-P2P platforms. While this action may improve governance in digital lending, it could also increase customer acquisition costs for P2P platforms. The P2P lending industry has faced regulatory scrutiny lately, prompting some companies to take preventive measures.

3one4 Capital-Backed Wint Wealth Acquires Ambium

Inc42 · 1y ago

3one4 Capital-Backed Wint Wealth Acquires Ambium

Bengaluru-based fintech startup Wint Wealth Group has acquired a majority stake in Chandigarh-based non-banking financial company (NBFC) Ambium Finserve. The deal, which has received approval from the Reserve Bank of India, provides Wint Wealth Group with an NBFC license. Ambium Finserve has started wholesale lending operations under the brand name Wint Capital, focusing on lending to growth-stage NBFCs for onward lending. Wint Capital's loan book is expected to grow to INR 500 crore by the end of 2024. Wint Wealth Group, founded in 2020, helps customers navigate fixed deposits, corporate and sovereign gold bonds, and bond baskets.

RBI rejects Kunal Shah's CRED application to increase stake in Newtap Finance

IndianStartupNews

IndianStartupNews · 1y ago

RBI rejects Kunal Shah's CRED application to increase stake in Newtap Finance

The Reserve Bank of India (RBI) has reportedly denied fintech unicorn CRED's application to increase its stake in its non-banking financial company (NBFC) Newtap Finance. CRED sought to raise its current 23.6% stake, aiming for a 76% stake, but the RBI's rejection may be linked to corporate governance and management concerns. CRED acquired Newtap Finance in 2021 to offer lending products to its users and is now exploring options to expand lending services and secure independent funding.

Indian finance ministry asks RBI to conduct monthly meetings with fintechs on regulatory issues

IndianStartupNews

IndianStartupNews · 1y ago

Indian finance ministry asks RBI to conduct monthly meetings with fintechs on regulatory issues

Finance Minister Nirmala Sitharaman has urged the Reserve Bank of India (RBI) to hold monthly meetings with fintech companies in order to address regulatory concerns and foster a collaborative environment. This move comes after recent regulatory actions taken against Paytm Payments Bank, highlighting the need for better communication and understanding between regulators and fintech firms. In a meeting with fintech stakeholders, Sitharaman stressed the importance of regulatory compliance while supporting innovation. The government also outlined action points to support the fintech sector, including simplifying KYC processes and addressing cybercrime issues.

IIFL Finance shares plunge after RBI bars firm from offering gold loans

VCCircle

VCCircle · 1y ago

IIFL Finance shares plunge after RBI bars firm from offering gold loans

Shares of IIFL Finance, an Indian non-banking finance company, dropped 20% after the Reserve Bank of India (RBI) barred the firm from offering gold loans due to "material supervisory concerns" in its portfolio. The RBI found serious deviations in collateral assessment, breaches in loan-to-value ratio limits, and lack of transparency in charges. A prolonged restriction may impact earnings, lower co-lending income and increase cost of finances. IIFL Finance stated that it has been taking corrective action and the impact on financials will depend on the resolution time.

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