Fintech companies are hoping to get clarity on the credit-based products would be impacted by the Reserve Bank of India’s recent directive to prepaid instrument issuers to stop loading credit lines. They are also hoping that the RBI will provide an extension in the timeline to help them meet the norms.

There continues to be confusion over whether products such as Buy Now Pay Later will also be impacted by the RBI directive, industry players pointed out

“Is the directive aimed at only one specific loan product or across the spectrum is a key question,” a source noted.

Another person said the industry is looking for clarity from the RBI on how this directive will work.

While the move is aimed at card-based fintech products, card-based credit lines are given by gold loan companies and microfinance institutions also, said the person.

A deferred implementation of the norms by six months to one year will also enable the players to suspend the services in a non-disruptive manner for consumers, said sources, adding that companies can also adjust their operations if they are given adequate time.

Industry associations, including Digital Lenders Association of India, Fintech Association for Consumer Empowerment, as well as the Payments Council of India, are hoping to get more clarity on these issues.

Representations on these issues are likely to be sent to the RBI by early next week.

Such card-based fintech lending is a growing industry, which is providing credit to a large part of the population, said the sources, adding that the issue will be highlighted to the RBI.

In a notification to non-bank pre-paid instrument issuers on June 20, the RBI said the PPI Master Direction does not permit loading of PPIs from credit lines.

In a statement on Friday, DLAI said: “DLAI and all its members are committed to being in full compliance with both the letter and the spirit of all regulations. We hope to be able to work with the RBI to implement any changes that might be required in a manner that safeguards the needs of all existing customers.”

However, it is unlikely the RBI will review the directive, given the recent focus on ensuring digital lending practices are fair and transparent. The RBI is also expected to bring in norms to regulate digital lending soon.

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