Last month, the Reserve Bank of India (RBI) issued a directive asking non-bank fintech not to provide credit lines onto prepaid payment instruments (PPIs) like wallets and prepaid cards. This set the cat amongst the pigeons. It threatened the operating business models of several new-age financial platforms, which realised they would need to pivot to survive.
Moneycontrol reported that Tiger Global-backed fintech, Slice, has already sought the RBI's permission to issue credit cards through its registered non-banking finance company (NBFC) Quadrillion Finance. This app adheres to RBI's recently updated Master Direction, which states that entities wanting to issue credit cards shall require a Certificate of Registration and a minimum net-owned fund of Rs 100 crore.
However, getting this approval might not be easy, as RBI is reportedly becoming stringent about allowing NBFCs who can issue credit cards. Those already in the queue to get the regulator's consent include larger NBFCs like Bajaj Finance, Aditya Birla Capital, M&M Financial Services, Sundaram Finance, L&T Finance Holdings, IDFC Ltd, and Tata Investment Corp.
Navigating Hurdles
Slice announced in May that it was shifting its focus to the Unified Payments Interface (UPI) digital railroad and other payment methods to diversify its services from just a card-based credit line business.
An Entrackr report added that Slice has switched from providing credit lines through its app to classic term loans. This new credit disbursal mechanism called Purchase Power—a reaction to the RBI directive—estimates the amount its customers are qualified to borrow from Slice. In an email sent to its users, the fintech noted that this limit could change at the time of the purchase, while a credit limit is a maximum amount a lender has already decided they can borrow.
"Every time you transact with your slice card, a new approval decision will be made instantly to assess the best amount you can borrow for the purchase. The decision will be determined primarily based on merchant credibility, risk, fraud checks, and your past payments as well as repayment patterns," the communication stated.
Through this shift, Slice is rejigging its financial service by offering flexible borrower-friendly repayment terms akin to traditional regular credit cards. Instead of providing a credit line, the fintech company will analyse a borrower's creditworthiness during every transaction.
