RBI will continue reforms till fintechs do not self-regulate: Online PSB Loans MD

During FY23, Online PSB Loans will target hitting Rs 1 lakh crore in disbursements, though the internal target is to reach Rs 1.25 lakh crore in disbursements, the MD said. (Representative image)

The Reserve Bank of India (RBI) will continue bringing new regulations for fintech players till they self-regulate and improve their lending practices, said Jinand Shah, Managing Director (MD) of fintech Online PSB Loans in 59 Minutes.

Fintechs provide infrastructure services to banks and non-banks and charge a fee for the same.

“If you see... recently there was a step by the RBI and there are certain ambiguities around it on how credit lines are being offered by various fintechs. So far as OPL (Online PSB Loans) is concerned, we never had any issue of such sorts as we are a pure play infrastructure provider,” Shah told Moneycontrol on June 27.

Shah was referring to the RBI’s latest diktat barring several fintechs from facilitating loans through Prepaid Payment Instruments (PPIs) of their partner banks.

“Fintechs themselves have to understand that it (loan rates) has to be controlled. You just cannot allow NBFCs (non-banking finance companies) to charge up to 40 percent rate of interest. If you allow that to happen, that fintech will never grow. It is a short-term gain, long-term loss,” Shah added.

As a practice, Online PSB Loans does not allow non-banks charging over 16 percent to 18 percent rate of interest on its platform, the MD said.

Business outlook

Till date, the online portal has helped lenders process loan applications valued at over Rs 1.25 lakh crore, while disbursements have crossed Rs 70,000 crore, Shah said.

The portal was first launched in 2018 by Prime Minister Narendra Modi with an aim to provide credit to micro, small and medium enterprises (MSMEs). It is backed by financial institutions including SIDBI, State Bank of India, and PNB, among others.

During FY23, Online PSB Loans will target hitting Rs 1 lakh crore in disbursements, though the internal target is to reach Rs 1.25 lakh crore in disbursements.

Apart from MUDRA loans and MSME loans, a trial is also being run for offering small sachet Goods and Services Tax (GST)-based loan product in the current financial year, Shah said.

“We are working very closely with SIDBI to introduce a GST-based product so if you are filing returns every month, you can check your existing cash flows, and overview GST volumes, and your funding can happen for 30 days, 60 days, or 90 days. It may not be a limit-based product, it will be very small sachet loans,” Shah said.

When asked whether the fintech has larger ambitions of conversion into an NBFC, Shah said the portal will always remain an infrastructure provider and will instead launch insurance products on its portal from this fiscal onwards.

Further, it will also aim to onboard all private bank products on its platform this fiscal, the MD added.​