Why more and more FinTech look for registering an NBFC with RBI – In recent times

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Executive Summary – In the recent times, it has been witnessed that many fintech players in India have approached RBI for registration as a Non-Banking Financial Company (NBFC). Besides the p...

Executive Summary – In the recent times, it has been witnessed that many fintech players in India have approached RBI for registration as a Non-Banking Financial Company (NBFC). Besides the primary purpose of using the technology for digital lending for their own captive purposes, the NBFC vehicle also gives an opportunity to the fintech to leverage the potential of mass outreach with digital only model of lending for small and medium ticket size loans.

Needless to say, that India has the highest fintech adoption rate which is around 87% (as research indicate). Also, India with 2nd largest fintech base in the world has huge potential for any kind of regulatory integration which could be win-win for the entire ecosystem.

Likewise, it is worthwhile to note that RBI recognizes NBFCs as an important pillar of the Indian financial ecosystem. However, we can also not undermine that post the IL&FS crisis, RBI has also tightened the regulatory regime covering specific areas such as corporate governance, liquidity management etc.