DizzyDonut

How safe is it to work in a fintech when RBI/govt goes on banning spree

https://m.economictimes.com/tech/technology/non-chinese-lending-apps-including-payus-lazypay-kissht-blocked-on-meitys-order/articleshow/97656552.cms

22mo ago

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ZoomyMuffin

Stealth22mo

Depends on the areas:

Money taking areas: neobanks, wealth, MF, stocktrading are going to be tightly regulated, audited and have been even before. Wallets, payment banks are awaiting a clarity on what their future will turn out

ZoomyMuffin

Stealth22mo

Lending/BNPL/CC: RBI can only regulate banks, NBFC's and CC issuers. Unless it becomes a KYC, privacy, Bureau or data security (Chinese) issue, RBI won't do anything. If collections become violent, then it's a political/criminal issue

ZoomyMuffin

Stealth22mo

Most lending apps borrow money from banks/NBFC's to lend forward, this is via securitization or Co-lending or NCDs. This is where RBI can stop the source of funding

SillyLlama

Stealth22mo

High likelihood of drastically changing biz model or even shutting shop. Everyone will eventually come under the regulated ambit and RBI is not happy to hand licences to everyone. In any case regulated business takes out the only differentiator in most cases - extreme ease of transacting/no kyc/no CIC reporting. Flimsy things to build businesses on.

DizzyDonut

Harness22mo

Exactly. If everyone looks the same and only differentiator is the UI/UX then that's a bad way or idea to base a business on. Doesn't bade well for the startups in the business.

GroovyBoba

X (formerly Twitter)22mo

Can't do much when RBI and SEBI be going around with a hammer. Not to mention fintechs under a lot of scrutiny these days.

PrancingPotato

Stealth22mo

The primary reason for RBI to gun fintechs is due to lack of compliance in these fintech. No internal audits, no supervision - everything is business driven. Fintechs who have partnered with strong Indian banks have flourished. Any bank or fintech working within grey area of RBI policies are bound to get snapped.

SillyLlama

Stealth22mo

No fintech is safe until regulated and the minute they get big they will be regulated. So create a biz model assuming the constraints of regulation which is a hell of a lot tougher. Only a patient long term player can play the game now. Days of hypergrowth are over.