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Here are the FinTechs that suspend service amid RBI’s scrutiny

After the Reserve Bank of India issued guidelines on digital lending, fintech startup Uni temporarily suspended its card services. This decision would have an impact on a significant number of users. 

The company has suspended services for the Uni Pay 1/3rd Card and the Uni Pay 1/2 Card in response to the latest RBI notification on digital lending. 

This action follows the suspension of Buy Now Pay Later (BNPL) services by several fintech companies, including Slice, LazyPay, Jupiter, EarlySalary, and Kredit Bee, after the RBI set tough limits on PPI models.

The Reserve Bank of India (RBI) has instituted a framework to regulate digital lending. Its new rules are based on recommendations made by a working group on ‘Digital Lending, including Lending through Online Platforms and Mobile App’ (WGDL) that was set up in January 2021. 

The central bank has taken a stand on key issues and provided clarity regarding things like direct loan disbursal to borrower accounts and borrower approval before the increasing credit limit, among other things.

“We are working with our banking partners to resume the card services as soon as possible and will keep you posted. However, there will be no change to your billing and repayments. This process will begin in phases for our customers starting today and will be concluded by Monday, August 22, 2022,” Uni said in a statement.

According to the RBI, NBFCs cannot engage in activities that go by the name of innovation yet call for licences. Most NBFCs have received warnings for using PPI models to load customers’ wallets and credit cards for ‘Buy Now Pay Later’ schemes. The BPNL model is, to put it lightly, lacking in integrity because it offers no consumer protection. 

The action by the central bank comes in the wake of growing anxiety around card-based credit services and PPIs loaded through credit lines. 

The RBI fears that because interest-free borrowing has increased recently, there is a risk of falling into a cycle of overspending.

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BRL Editor
BRL Editor
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