Armed with a strong balance sheet and with access to large amount of data from the Reliance Group's businesses, the fintech's foray into the loan market could make life difficult for smaller nonbanking finance companies and fintechs. Analysts believe Jio Financial can use its NBFC to lend to consumers and merchants, leveraging the group's retail distribution network of more than 15,000 stores.
Fintechs without an NBFC licence will have to re-invent themselves within the smaller playing area as demarcated by the regulator. Since prepaid instruments (PPIs) funded from the credit lines of shadow banks are out and only regulated entities can lend, one should expect mergers or collaborations so that the combined user base can be leveraged. Even for those that operate via NBFCs, 2022 has been a difficult year, with many of them providing more for loan losses. Digital collection players have cautioned on rising stress.
There could be consolidation in the fintech space as players with large consumer bases - payments players for instance acquire those that are selling loan, insurance and wealth management products. That would help the former reduce their cash burn.
This story is from the December 29, 2022 edition of Financial Express Mumbai.
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This story is from the December 29, 2022 edition of Financial Express Mumbai.
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