Roughly 10 years ago, Spice Money, an Indian rural financial services company, offered just one service—digital train ticket booking on the Indian Railway Catering and Tourism Corporation (IRCTC) portal. Over the next five years, the company, a fully owned subsidiary of DiGiSPICE Technologies, rolled out digital payment options for tour and travel bookings, utility bill payments, insurance, cash withdrawal and direct money transfers. But for the past three years, the company has focused its attention on small-ticket loans. It has tied up with third-party lenders and has now queued up for a non-banking financial company (NBFC) licence.
The queue for NBFC licences keeps getting longer. Hordes of fintech start-ups are lining up at the doors of the Reserve Bank of India (RBI) to obtain licences that allow them to give loans on their own books. In the queue are micro-saving platforms, payments firms and stock broking companies. For India’s fintech sector, loans seem to be a sure-fire way to profitability.
Loan Route to Success
Many fintech start-ups originating in non-lending verticals have sought to move to lending verticals over the past few years. Walmart-owned PhonePe has been lending to 3.9 crore merchants in partnerships with NBFCs and banks since May 2023. Two months into the lending business, PhonePe achieved an annualised disbursal run rate of ₹1,000 crore and disbursed more than 20,000 loans through its NBFC partners. A month before venturing into the loans business, PhonePe chief executive Sameer Nigam was quoted saying the company may consider applying for an NBFC licence at some point.
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