Unsecured loans in focus, fintechs see NBFC credit taps drying up
unsecured loans, industry executives said.
This follows the central bank’s strictures in mid-November requiring financial institutions to increase risk weights, or capital outlay, for unsecured consumer loans by 25%.
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Offering CollegeCourseWebsiteIndian School of BusinessISB Professional Certificate in Product ManagementVisitIndian School of BusinessISB Digital TransformationVisitIIM LucknowIIML Executive Programme in FinTech, Banking & Applied Risk ManagementVisitIn turn, banks that lend to NBFCs have turned cautious forcing these companies to pull back on their credit lines to fintechs that offer small personal loans to consumers.
Large NBFCs like Aditya Birla Finance and Poonawalla Fincorp have informed the fintech startups they do business with that they will no longer provide capital for the highly risky buy-now-pay-later (BNPL) and very small ticket size consumer loans, according to the people cited above.
“Aditya Birla Finance had allocated around Rs 600 crore for this segment, but they are reducing the allocation by 50%,” said a chief executive at an NBFC.
Highly Rated Fintechs in Favour
Aditya Birla works with fintech startups such as Fibe (formerly EarlySalary), Paytm and Navi.
Industry executives in the know said that Poonawalla Fincorp has also informed its fintech partners that it will start to withdraw credit lines for small-ticket unsecured loans.
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Poonawalla Fincorp works with fintechs like Ring (previously Kissht), Axio (previously Capital Float), Slice, and Kreditbee.
Emailed queries to Aditya Birla remained unanswered while Poonawalla Fincorp declined comment.
“NBFCs do not
