Dec 7, 2023

Testing times for fintechs’ small-ticket loan business; banks leverage Bharat Billpay Also in this letter: ■ Foxconn’s Bharat FIH to invest Rs 400 crore in Indian arm ■ India’s tier-II cities attract 20% of GCCs in H1 2023 ZestMoney saga highlights drying NBFC credit flow This is Pratik Bhakta in Bengaluru, and I have some bad news from the fintech world. The days of easy money are over . Not only for startup founders looking for venture funding, but also for consumers seeking quick loans. Large non-banking financial companies (NBFCs) with significant exposure to consumer lending startups are going cautious, many industry insiders told us. And that’s impacting these fintechs’ ability to cater to their customers. What’s the news? Buy-now-pay-later (BNPL) is losing steam. Financial services major Paytm has decided to scale down its BNPL product , Paytm Postpaid. While the company might hold on to some high-frequency users who can be sold other credit products, it will not renew credit lines for others. On Tuesday, PayU and Goldman Sachs-backed ZestMoney shut down operations . Industry sources tell us that even they had their credit lines withdrawn by their partner NBFCs. Tell me more: To ensure that there is no adverse impact on its stock price, Paytm reached out to its stock analysts, explaining the future of its credit business. Chief operating officer Bhavesh Gupta said that this will impact its Postpaid disbursals, rate of customer acquisition and, in turn, its topline. Disbursals will go down 50% and new user additions will halve too, Gupta said on the analyst call. But he added that Paytm will focus on larger-ticket personal loans and merchant loans going forward. Impact on the market: Fintech startups depend on banks and NBFCs to lend to their borrowers. Now with the RBI diktat on slowing down unsecured lending, fintechs find themselves in a difficult position. “The message from our lending partners is that they are going to be careful with loans extended in the sub-Rs 50,000 category, overall small ticket size personal loans is not something they are bullish about,” said one of the founders of a major fintech lending startup. Banks leverage Bharat Billpay for loan, credit card repayments Bharat Billpay, the bill payments platform promoted by the National Payments Corporation of India (NPCI), is being increasingly used for loan repayments . This is emerging as the next major use case after utility bill payments and Fastag recharge. Quick numbers: As per data shared by NPCI, out of 119 million payment transactions on Bharat Billpay in October, 14.2% were loan repayments, up from around 10% in January this year. Credit card bill payments, which were almost negligible even a couple of months ago, accounted for 1.2% of the overall transactions in October. What does this mean? Bharat Billpay was built to digitise the country’s large utility bill payment market. But eventually the platform, which could generate a bill every month on a specific date, built multiple use cases. EMI payment is one such use case that’s becoming very popular now. Banks coming in: During the pandemic, NBFCs started using Bharat Bill Payment Service (BBPS) to generate EMIs for their customers. The service allows users to pay digitally as well as through cash. But over the last few months, large lenders like Axis Bank, ICICI Bank and IndusInd Bank have adopted this for their borrowers. And now credit card bills, too, are being generated through BBPS. Pricing key for EVs to generate $100 billion in business by 2030: report Solving for pricing points is among the top caveats crucial for India’s ability to create a $100 billion market in the electric vehicle (EV) space by 2030, Bain & Co said in a report on Wednesday. Findings: The sector report, launched in partnership with early-stage venture capital firm Blume Ventures, stressed on product development in the entry- and mid-segment to promote adoption of electric vehicles in India. It added that the market needs to grow more than tenfold in volume over the next six to seven years to achieve this projection. Investment flush: India’s EV market experienced an uptick in investment in the past two years, with about $1.5-2 billion of capital raised each year in 2021 and 2022, as per the report. The investments were directed into manufacturers such as Tata, Mahindra, Ola and Ather , for the most part. Mid-segment growth: “There will be a lot of play in the mid-segment of EVs, not to say that premium won’t continue to grow, but there will be a spectrum of offerings that will make it important for dealerships to re-strategise on display, sales and monetising. And this is where D2C delivery will also start becoming important,” Mahadevan Seetharaman, a partner in Bain & Company, told ET. Foxconn’s Bharat FIH will invest Rs 400 crore in Indian arm rising stars Bharat FIH, a subsidiary of Hon Hai Precision (also known as Foxconn) will inject Rs 400 crore in its wholly-owned subsidiary Rising Stars Hi Tech as a “long-term investment” for working capital and general corporate purposes. Deal details: The investment is scheduled for this month, FIH Mobile said in a stock exchange filing, dated December 5, in Hong Kong. FIH Mobile said the funding will increase the issued share capital of Rising Stars Hi Tech to Rs 450 crore. The connection: Bharat FIH, formerly known as Rising Stars Mobile India, is a Foxconn Technology Group company which established its first unit in 2015 at Sri City in Andhra Pradesh. The company has been ramping up its India manufacturing presence and has been making big-ticket investments across the country for the same. Catch up quick: The announcement comes a week after Foxconn said it would invest more than $1.5 billion in an Indian construction project to fulfill the Apple supplier’s “operational needs”. The investment was made through a Foxconn subsidiary, Hon Hai Technology India Mega Development. India’s tier-II cities attract 20% of global capability centers in H1 2023 In the first half of 2023, 20% of new global capability centres (GCCs) in India chose to set up bases in tier-II cities, reflecting a trend of companies tapping into new talent markets, as per data from real estate consultant CBRE. Despite slowing global technology demand, GCCs across various sizes and maturity levels are expanding and consolidating their presence in India. Emerging hubs: A Nasscom-Zinnov report indicates that India had 1,580 GCCs with 1.66 million employees in 2022-23. While tier-I cities like Mumbai, Pune, and Bengaluru saw the establishment of 18 new GCCs in the first half of 2023, tier-II and -III cities like Ahmedabad, Mysuru, Vadodara, Nashik, Tirunelveli, and Coimbatore are becoming crucial hubs for the expansion of existing units. Govt’s red carpet: States are actively encouraging the establishment of such centres. Tamil Nadu’s R&D Policy 2022 offers incentives to entities, including GCCs, covering aspects like electricity and stamp duty costs. Hyderabad, hosting around 16% of all capability centres in India, is surrounded by research institutes in biotechnology and pharmaceuticals, attracting companies like Novartis and AstraZeneca. Ashneer Grover, former managing director, BharatPe NCLT seeks clarity from Ashneer Grover on maintainability of petition against BharatPe: The National Company Law Tribunal (NCLT) on Wednesday asked former BharatPe managing director Ashneer Grover to establish the maintainability of his petition filed with the tribunal seeking relief from actions taken by Gurugram-based fintech company against him, and his wife and former head of controls at BharatPe, Madhuri Jain. Mobile Premier League net loss narrows to $37 million in FY23 as revenue grows, expenses fall: Bengaluru-based online real money gaming company Mobile Premier League (MPL) saw its net loss during the fiscal ended March 31 reduce sharply to $37.04 million , from $194.47 million a year ago. The company’s topline grew 63% year-on-year, and expenses came down, as per its annual financial statements. India should embrace AI’s potential while ensuring safety: MoS IT | India should be careful not to demonise artificial intelligence (AI) by focusing only on the risks related to the technology, minister of state for electronics and information technology Rajeev Chandrasekhar said. “I am concerned, as most of us should be concerned, that governments when they react, tend to overreact,” he said at the Carnegie Global Technology Summit on Wednesday. Global Picks We Are Reading ■ A Kremlin-linked network used fake Taylor Swift quotes to push anti-Ukraine propaganda ( Wired ) ■ Influencers are getting young Nigerians hooked on online gambling ( Rest of World ) ■ 23andMe hack is a wake-up call for your password habits ( WSJ )