BE/RBI NOTE/02/2019
Financial Technology has now reached its advanced stage.
- Fintech Start-up companies have now applied for RBI license to operate as Non-Banking Financial Companies.
- This would help the consumers availing credit facilities from such financial institutions to have a greater advantage and reach to various schemes and loan facilities.
- While some have applied for a license from RBI others are said to be in the queue.
Shubh Loans:
Bangalore based Shubh Loans is already in the process of applying for an NBFC license.
- This is expected to facilitate these institutions in penetrating into the unserved segments of the economy
- Shubh loans has reached a monthly disbursal rate of Rs. 15 crores and they are doing around 5000 loans a month in partnership with nine lenders.
Moneytap:
Another institution namely Moneytap is planning its own lending license. They are exploring into various options viz
- Getting their own NBFC license
- Partnering with someone who has recently received the license
- Working with an established entity
Moneytap had started their lending process by partnering with RBL Bank.
Reasons for Entrepreneurs entering the NBFC route:
- The liquidity crunch in the financial sector is said to be a wake-up call for many tech platforms
- Entrepreneurs after several lending companies have switched off their channels came to the conclusion that being at the mercy of these companies would pay no dividend.
- Another reason is Aadhar based verification which impaired the digital lending industry.
Advantages:
- If a license is procured, that would bring down the borrowing cost, increased margins, and pave way for easy operations.
- These Start-ups are in the trade for over 3-4 years and have terrible underwriting capabilities.
- Furthermore, they are conversant with the delinquency of the Indian consumers and makes it comfortable for them to enter the lending market.
Disadvantages:
Of course it would be a challenge for these companies to go through the strict regulatory guidelines and get over them before getting a license.
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