Fi Secures NBFC License from RBI: Expanding Financial Services Offerings

Fi, a neobanking startup, backed by investors such as Peak XV and Temasek, has obtained a non-banking finance company (NBFC) license from the Reserve Bank of India (RBI), enabling it to provide loans from its own books. This development aligns with the trend seen among fintech startups in recent years, where acquiring NBFC licenses facilitates direct lending and asset base establishment.

Key Details

 Fi’s Strategic Move

• Fi, founded by former Google executives Narayanan and Gwalani in 2019, offers zero-balance savings accounts, investments, payments, and savings services.
• The acquisition of the NBFC license marks a significant step for Fi, empowering it to expand its offerings to include independent lending alongside its existing financial services.

 NBFC Licensing Trend in Fintech

• In response to RBI’s stringent regulations on online credit disbursal, fintech startups have increasingly pursued NBFC licenses.
• These licenses allow fintechs to offer loans directly from their own books, establishing a valuable asset base rather than acting solely as intermediaries.

 Investor Backing and Financial Standing

• Fi has garnered substantial equity funding, totaling around $160 million, from prominent investors like Ribbit Capital, Alpha Wave Global, and Temasek.
• The backing from investors underscores Fi’s growth potential and positions it strongly within the competitive fintech landscape.

 Challenges and Industry Landscape

• While the RBI has shown openness towards granting lending licenses to fintech entities, some players, including Fi, have faced obstacles in obtaining the license.
• Other notable fintech startups, such as Pune-based unicorn One Card and ‘buy now, pay later’ startup Uni Cards, have encountered similar challenges in navigating regulatory requirements.