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India’s digital lending rules spark disruption
August 29, 2022
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.
Solving “time-sensitive money crunches” made Uni popular: its cards were swiped for $67 million on average monthly, much more than credit card usage of some smaller private and public banks in India.
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