RBI rejects Cred bid to boost stake in Newtap Fin
NEW DELHI : Cred’s attempt to increase its stake in a non-banking finance company founded by Kunal Shah has run into hurdles, with the Reserve Bank of India rejecting the Bengaluru-based fintech’s application, two people familiar with the development said. The fintech’s plan to increase its stake in Newtap Finance, formerly Parfait Finance and Investments, from the current 23.6% stake suffered a setback after the regulator returned Cred’s application. For now, Shah owns 76%.
Shah acquired Parfait through Newtap Technologies Pvt. Ltd in 2021. Mint could not independently ascertain the reason for RBI’s decision to return the application, but one of the two executives cited above said Cred is engaged in discussions with the banking regulator to determine the reason.
“Cred applied to take control of the NBFC. But last month, the application got rejected on the grounds of ‘corporate governance and management issues’," said a second executive, declining to be named. The first person cited above, however, denied RBI had referred to any corporate governance or management issues in the letter returning the application.
A query sent to Kunal Shah and an email sent to the spokesperson for RBI went unanswered. Cred is looking to raise equity and debt for Newtap Finance independently – for which the company is looking to change the shareholding structure of the NBFC. Cred is pursuing equity and debt fundraising for Newtap Finance, prompting it to restructure the NBFC’s shareholding.
“NBFCs are constantly in the business of raising capital. This is a part of the process to grow the business and to infuse capital," the first person added. Cred, which started as a credit card payment company in 2018, is now focusing on lending.
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