Zomato withdraws NBFC application, says no plans to pursue lending

Food and grocery delivery major Zomato has pulled the plug on its plan to enter the lending business. Zomato Financial Services, a wholly-owned subsidiary of Zomato, has withdrawn its application for a non-banking financial company (NBFC) licence with the Reserve Bank of India (RBI), stating that the company does not have plans to pursue lending in the future. 

“There is no material impact on the revenue/operations of the company and this disclosure is being made voluntarily,” the Gurgaon-based company said in a regulatory filing on Tuesday.

The application for NBFC licence was submitted on April 29, 2022.

It comes at a time when the company was reportedly in talks with multiple NBFCs to offer working capital loans to its partner restaurants. Zomato had incorporated Zomato Financial Services in February 2022. 

The disclosure comes as a separate subsidiary of the company, Zomato Payment Private Limited (ZPPL), voluntarily surrendered the certificate of authorisation it obtained from the Reserve Bank of India (RBI) to operate as an online payment aggregator in May this year. 

Zomato had announced the incorporation of ZPPL in 2021 as its wholly owned subsidiary to carry out the business as a payment aggregator and an issuer of prepaid payment instruments.

Last month, the company along with fintech major Paytm confirmed that they were in talks for a potential acquisition of fintech’s movie and event ticketing business. 

Although neither Zomato nor Paytm disclosed the valuation of the transaction, the potential deal is estimated to be in the range of ~1,600 crore to ~2,000 crore. 

This would be Zomato’s second-largest purchase since acquiring Blinkit in 2022 for $569 million in an all-stock deal.

The deal was in line with Zomato’s strategy to ramp up investments in its going-out business.

The company also announced last week that it will invest ~100 crore in Zomato Entertainment, which includes its live events and ticketing business.