The Reserve Bank of India (RBI) has recently taken regulatory action against certain fintech and non-banking financial companies (NBFCs), citing concerns over their asset quality, risk management practices, and credit underwriting standards. 

JM Financial Products Ltd has been barred from extending loans against shares and debentures, with the RBI citing regulatory and governance lapses. The RBI has indicated that the imposition of financial penalties and business embargoes may escalate, causing regulated entities and fintech companies to remain vigilant. This trend of penalties and embargoes might continue, making fintech’s and regulated entities nervous. IIFL Finance was asked to halt giving out gold loans immediately because of supervision worries about their gold loan portfolio. IIFL says most concerns are about operations, not unethical behavior. 

“We believe these punitive actions will impact systemic growth for NBFCs in the near term, but will hopefully curb unethical business practices, avert systemic collapse as seen in the past, and enhance stakeholder confidence in the long run," said analysts at Emkay Global Financial Services. 

RBI Directs Credit Card Issuers to Offer Multiple Network Choices 

The Reserve Bank of India (RBI) has taken a significant step toward empowering consumers and fostering competition by instructing credit card issuers to offer eligible customers the choice of selecting from various card networks. 

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Highlighting the need for increased consumer choice, the RBI mentioned in a circular that certain arrangements between card networks and issuers limit options for customers. As per the directive, card issuers must allow eligible customers to choose from multiple card networks when obtaining their cards. 

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While American Express, Diners Club International, Mastercard, Visa, and RuPay cater to customers in India, banks typically pre-determine the provider based on the specific card issued. The RBI underscored the importance of adherence to its guidelines by card issuers and networks, especially during the amendment, renewal, or initiation of agreements. 

Google delists Indian apps and enlists them back: The full story  

On March 1st, out of the blue Google delisted more than 100 Indian apps such as Bharat Matrimony, Naukri, Shaadi.com, and Kuku FM from the Play Store.  

The Reason: These apps did not comply with the Play Store payment policy. According to the updated Payment Policy, Google charges between 11-30% as commission for in-app purchases. This means if a customer has the paid subscription to an app or a customer buys digital services from an app, play store will receive a commission. According to Google, 99% of the businesses are small businesses and are charged 15%.  

Criticism against Google: In India, around 95% of mobiles run on Android, which is owned by Google and gives the company a monopoly. Even though we have the Samsung app store and other app stores, Google’s Play Store has the monopoly. Many startup founders took to social media to protest this blatant action of Google.  

Meeting with Govt: Following a discussion with Union Information Technology Minister Ashwini Vaishnaw, Google decided to relist the apps. However, the company will continue to invoice the full applicable service fees, but will extend the payment timelines for the affected companies. 

More news from the week ...