India’s digital lending rules spark disruption, firms plan pushback

India’s stricter digital lending rules have disrupted card services of foreign-backed fin-tech firms and jeopardised loan offerings of Amazon, prompting companies to chart a lobbying pushback, according to industry sources and a document seen by Reuters.
Citing concerns over high rates and unfair practices, the Reserve Bank of India (RBI) this month said a loan borrower must deal directly with a bank, dealing a blow to prepaid card providers and shopping websites which act as intermediaries and instantly process deferred loan payments.
India’s digital lending market has grown quickly and facilitated $2.2 billion in digital loans in 2021-22, with startups attracting foreign backers and giving traditional banks a run for their money in the credit business.
The new rules have already hit prepaid card offerings of Tiger Global-backed Slice and Accel-backed startup Uni, which have partnered with banks and allowed users to split purchases into interest-free easy repayments, a feature not available with typical credit cards.