RBI Guidelines For FinTech BNPL Cards

[TechnoFinoTechnoFino is verified member.]

In a move that could have huge ramifications for India’s fledgling Buy Now Pay Later market, the RBI has asked non-bank prepaid payment instrument (PPIs) issuers to not load these instruments through credit lines.
In simple words, Fintech companies like slice, uni pay, etc can not issue credit line card in partnership with any NBFC (Although, No official notification from RBI till now, we have to wait for official confirmation).

Possible Reasons -
1. Loading PPIs from credit lines is not permitted by the master instructions on prepaid payment instruments (PPIs)
2. RBI wants to regulate all digital lending business strictly
3. RBI wants to make digital lending more safe for customers
2. Mis-selling by fintech companies - Fintech companies don't even care to inform their customers that they will be issued a credit line not a credit card.
3. Small NBFCs doesn't even follow RBI fair practice code (in maximum cases).
3. They don't have proper functional grievance redressal mechanisms.
4. Credit Line Card business is way cheaper than Credit Card business (Maybe... RBI wants to protect credit card business)
5. Credit Cards are well defined & well regulated product, Maybe, RBI wants Fintech companies to issue credit card, not BNPL so that RBI can regulate them under same rules/conditions.
6. According to RBI, NBFCs can issue credit cards with prior approval from The RBI (maybe it was a plan).

What do you think? What could be the possible reasons behind this move?

 

[Abhishek012]

Fintech firms such as Jupiter, EarlySalary and KreditBee have temporarily stopped customers from making any transactions on their prepaid cards.

Some partner banks of these card-based fintech firms may also stop supporting their bank PPIs to these platforms after seeking a clarification from the RBI, multiple sources said.

Card-based fintech firms such as Slice, Uni, Kissht (through its Ring card offering) and LazyPay are also likely to be severely impacted, with their business models now questioned, the sources added.

According to a source, some fintech firms are already considering re-issuing credit cards as some bank partners log out to comply with RBI’s communication.

“Amid heightened uncertainty, some of these major bank partners got the note clarified from the RBI and learnt that the notification also applies to bank PPIs. This has led to some banks informing their fintech partners that they will not be providing bank PPI support to them any longer,” said a fintech executive on condition of anonymity.

 

[StanRoute66]

In a move that could have huge ramifications for India’s fledgling Buy Now Pay Later market, the RBI has asked non-bank prepaid payment instrument (PPIs) issuers to not load these instruments through credit lines.
In simple words, Fintech companies like slice, uni pay, etc can not issue credit line card in partnership with any NBFC (Although, No official notification from RBI till now, we have to wait for official confirmation).

Possible Reasons -
1. mis-selling by fintech companies - Fintech companies don't even care to inform their customers that they will be issued a credit line not a credit card.
2. RBI restricted NBFCs from loading credit lines into prepaid payment instruments, not banks (this is still not clear, we have to wait for official notification) -
a. Small NBFCs doesn't even follow RBI fair practice code (in maximum cases).
b. They don't have proper functional grievance redressal mechanisms.
3. Credit Line Card business is way cheaper than Credit Card business (Maybe... RBI wants to protect credit card business)
4. Credit Cards are well defined & well regulated product, Maybe, RBI wants Fintech companies to issue credit card, not BNPL so that RBI can regulate them under same rules/conditions.
5. According to RBI, NBFCs can issue credit cards with prior approval from The RBI (maybe it was a plan).

What do you think? What could be the possible reasons behind this move?

Happy days !
Glad to see BNPL being regulated down

 

[ashwinkashwink is verified member.]

Happy days !
Glad to see BNPL being regulated down

Kind of Achche Din🤣

 

[Abhishek012]

Yes
Hoping RBI brings more guidelines

Slice/Uni should launch Credit card like OneCard.

101% credit card tieup with banks.