With non-banking finance company licenses issued to fintech majors such as Cred and Jupiter, multiple fintechs have pursued the banking regulator for a NBFC license. These are said to include OneCard, Uni Cards, Upswing, Fi and WintWealth. However, according to highly placed sources, the regulator is reluctant to consider their applications. The reason apparently is because of an overlap in captable or capital structures of these fintechs. It is learnt that a few of them having certain venture capital investors who have also invested in a some fintechs which has already received NBFC licenses in the last 1 – 2 years. “RBI generally is not in favour of a business house holding multiple non-bank licenses. It seems to have extended the same logic with venture capital and private equity investors,” said a highly placed source aware of the matter.

The logic here is that once a fintech takes the form of NBFC, its business gets built on the leverage from bank loans, as against equity capital in its earlier avatar. “This is in turn a contingent risk for bank and with bank lending to NBFCs at a all-time high, it warrants for a calibrated approach by the regulator,” said the person quoted above.

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It is gathered that Pune-based fintech unicorn OneCard (which has common investors with Jupiter) housed under FPL Technologies was in pursuit of inorganic modes of securing a NBFC license, but the proposal didn’t get a go-ahead from the central bank. Post this, the fintech is exploring the option through the ‘application’ route. RBI approval is pending.

The BNPL start-up Uni Cards’ experience isn’t very different. “It’s NBFC licence application has not gone through yet,” said a person aware of the matter. Uni Cards holds PPI or prepaid payment instrument license, essentially to operate as mobile wallet apart from peer-to-peer or P2P NBFC licence.

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The digital lending guidelines issued last year followed up with the FLDG or first loss default guarantee norms has put fintechs in a corner where that have to choose between operating as a technology provider versus a lender subjected to regulatory directions. “At one end fintechs are choosing the latter, but the RBI isn’t warming up to the idea yet. It doesn’t want the space to get unduly crowded,” said a senior executive of a fintech.