RBI’s Actions to Restrict Unsecured Consumer Loans Might Impact Fintechs
- ByStartupStory | November 17, 2023
RBI’s Measures to Restrict Unsecured Loans Could Hit Fintechs Amidst Rising Profits
Fintechs, experiencing increased profitability driven by heightened credit expansion, might face challenges due to the Reserve Bank of India’s efforts to limit the proliferation of unsecured loans.
The central bank’s actions involve tightening regulations for personal loans and credit cards, necessitating banks and non-banking financial companies (NBFCs) to hold more capital for such borrowings, potentially impacting fintech firms.
Notably, major players in the fintech industry have observed substantial growth, largely fueled by significant credit disbursement from top-tier NBFCs and banks. However, the RBI’s directives could pose a risk of reduced credit availability for these startups.
Madhusudan E, the founder of consumer lending startup Kreditbee, mentioned to Moneycontrol that while immediate impact may be felt by those heavily reliant on lending partners, his company, having recently secured equity funding, might not face immediate repercussions.
Nevertheless, if these policies persist long-term, it could affect the loan book growth of all fintechs, considering the cyclical nature of lending.
Fintech industry executives foresee a potential slowdown in loan origination unless smaller banks and NBFCs manage to raise capital, a prospect unlikely to materialize in the near future
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