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With many credit products infiltrating the market, RBI has acted in the interest of consumer safety.
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The Reserve Bank of India has issued a fresh notification that bans all non-bank prepaid payment instrument (PPI) issuers from loading credit lines. This notification was sent to non-bank PPI issuers, including many fintech players in the country.
RBI issued a notification that read “The PPI-MD does not permit loading of PPIs from credit lines. Such practice, if followed, should be stopped immediately. Any non-compliance in this regard may attract penal action under provisions contained in the Payment and Settlement Systems Act, 2007.”
With many credit products infiltrating the market, RBI has acted in the interest of consumer safety. While many fintechs work with banks to offer such products, other partner with NBFCs and NBFC partners. This could be problematic.
Many fintechs in the country, including Amazon, Paytm, Slice, Uni, Fi, and LazyPay, offer credit products and credit cards alongside their main offerings in partnership with banks and NBFCs.
More detailed guidelines are expected to be rolled out in the near future which would clarify the extent of influence the new notification will have on the fintechs.