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The Reserve Bank of India’s (RBI’s) notification saying that non-bank prepaid payment instruments (PPIs) cannot be loaded with credit lines has sent the country’s fintech ecosystem into a tizzy, with many of them even halting operations temporarily. Amid mixed reactions and calls for further clarity from stakeholders, BharatPe cofounder Ashneer Grover criticised the central bank.

In a tweet, Grover said that the latest notification from the RBI is aimed at protecting the credit card business of banks. “Not allowing loading of prepaid instruments through credit is aimed at protecting bank’s lazy credit card business from fintech’s potent BNPL business. It’s a flex move by banks – rent seeking,” he wrote.

He also said that the regulations will ultimately have to adjust as per the needs of the market. “But market is market and regulation will eventually come around to what market needs.”

The former MD of BharatPe has on multiple occasions claimed that he built the startup and its BNPL product PostPe, through which BharatPe claims to have amassed a large merchant and individual user base.

The latest directive from the central bank is likely to affect several fintechs like Ola Postpaid, Paytm Postpaid, PostPe, slice, Uni card, among others.

Netizens Disapprove Of Grover’s Criticism Of The PPI Mandate

Grover’s criticism of the RBI’s move did not sit well with many netizens, who criticised his stance, calling it as ‘promoting debt trap and fast business’, ‘lazy analysis’, ‘not focussed on public interest’.

The critics said that the BNPL model promotes an unregulated credit economy, where credit is available to users without even understanding the consumer background and repayment intent.

The users also praised the RBI’s move as the complaints about BNPL players have been increasing.

Recently, Yorker media cofounder Ratnesh Kumar took to Twitter to explain how ZestMoney had approved a loan of INR 1.4 Lakh without even him asking for it. Similar complaints about Ola Postpaid and Paytm Postpaid have also been made by users on Twitter, with many claiming that the companies are giving loans without informing users, hurting their CIBIL scores.

Business Model Of Fintechs In Question?

The RBI circular has raised questions on the business models of many of the fintech players like slice, MobiKwik, UniCard, among others.

The fintech industry stakeholders associations have urged the central bank to give further clarity and sought an extension for the new mandate.

The notification is expected to not only affect the fintech players but also non-banking financial companies (NBFCs), many of whom have partnered with the new-age fintech startups.