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Fintechs show interest in becoming SFBs, but transitions involve risks

The fintech model is conceptualised as asset-light, which, in fact, played a huge role in Fino Payments Bank's early breakeven

Digital lending, fintech, digital lenders
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Analysts at BofA Securities pointed out that a hybrid model would become inevitable for fintechs

Hamsini Karthik Mumbai
On Wednesday, the Reserve Bank of India (RBI) said digital lending platforms used on behalf of banks and non-banking finance companies (NBFCs) should disclose the names of such lenders to customers. This may be the first sign of a tightening regulatory regime for digital, or fintech, companies. Perhaps in anticipation of a faster compression in the regulatory arbitrage between payments banks (the most popular fintech model) and traditional ones, the RBI’s internal working committee suggested that the term of conversion to small finance banks (SFBs) be reduced from five to three years for payments banks (that is, banks that can

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First Published: Dec 25 2020 | 6:10 AM IST

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