MobiKwik Sets Up NBFC Arm, Prepares to Seek RBI License

MobiKwik Sets Up NBFC Arm, Prepares to Seek RBI License 

Mobikwik NBFC Arm RBI Licence

MobiKwik, a well-known Indian fintech company, has started a Non-Banking Financial Company (NBFC) arm in a significant move to expand its financial services portfolio. This development is in line with the company's goal of obtaining a license from the Reserve Bank of India (RBI), which would mark a significant transition from a provider of digital wallets to a complete platform for financial services. Understanding the Indian NBFC Landscape NBFCs play a crucial role in India's financial ecosystem, offering banking services without meeting the legal definition of a bank.  

 They provide a range of financial services, including loans and credit facilities, retirement planning, and investment options.  Establishing an NBFC arm gives fintech companies like MobiKwik more freedom to offer credit products and financial services to underserved segments of the population. The Road to Financial Diversification at MobiKwik MobiKwik was founded in 2009 by Bipin Preet Singh and Upasana Taku as a mobile wallet service that allowed customers to make digital payments. The company has added insurance, investment products, and Buy Now, Pay Later (BNPL) options to its offerings over the years. The decision to set up an NBFC arm is a strategic move to further diversify its offerings and tap into the burgeoning credit market in India.​

 

 The Importance of the RBI's Initial Approval In October 2023, MobiKwik's payment gateway subsidiary, Zaakpay, received in-principle authorization from the RBI to operate as a payment aggregator.  This approval allows Zaakpay to onboard new merchants and expand its services in the digital payments space.  MobiKwik's compliance with regulatory standards and commitment to improving India's digital payment infrastructure are demonstrated by the RBI's approval.

 Obstacles and Compliance with Rules Navigating the regulatory landscape is a significant challenge for fintech companies.  MobiKwik's initial application for a payment aggregator license was rejected by the RBI, citing concerns over its association with cryptocurrency exchanges.  However, the company addressed these concerns and reapplied, eventually securing the necessary approvals.  This experience underscores the importance of regulatory compliance and adaptability in the fintech sector.​

 

 Consequences for the Fintech Industry MobiKwik's expansion into NBFC operations and its pursuit of an RBI license reflect broader trends in the fintech industry.  As digital financial services become increasingly integral to India's economy, companies are seeking to offer a comprehensive suite of products to meet diverse consumer needs.  MobiKwik's strategic moves could set a precedent for other fintech firms aiming to broaden their service offerings and achieve greater financial inclusion.​

 Future Prospects and Strategic Vision

 With the establishment of its NBFC arm and the anticipated RBI license, MobiKwik is well-positioned to enhance its credit offerings, particularly in the BNPL segment.  The company's focus on underserved markets and its commitment to leveraging technology for financial inclusion align with India's broader economic goals.  As MobiKwik continues to innovate and expand, it may play a pivotal role in shaping the future of digital finance in the country.