A number of large internet retailers, including giant Amazon and contender Flipkart, have begun to lobby against India’s new digital lending rules after the regulations interrupted card services and put Amazon loan offerings in peril.
Earlier this month, the Reserve Bank of India (RBI) issued a rule that said borrowers must deal directly with banks. This was bad news for prepaid card loan providers, and other services that serve as loan intermediaries, Reuters reported Friday (Aug. 26).
“All loan disbursals and repayments are required to be executed only between the bank accounts of [the] borrower and the regulated entity without any passthrough/pool account of the lending service providers or any third party,” the central bank said in its announcement.
In addition, the Reserve Bank said fees paid to apps will now be covered by the lender, with no burden on borrowers.
The new rules have hit prepaid card offerings from companies such as Uni and Slice, which have teamed with banks and let users split purchases into interest-free repayments, a feature not offered with typical credit cards, Reuters reported.
Read More: Indian Platform Markets, Data, and Privacy
The RBI has said the new regulations were to be implemented right away but noted that “detailed instructions will be issued separately,” according to the report.
However, Uni suspended its card services this week because of the RBI rules, while Slice has halted the issuance of new cards, the report stated.
Meanwhile, there are also concerns that the rules will hamper efforts by larger companies like Amazon and Walmart-owned Flipkart to expand their buy now, pay later (BNPL) programs, according to the report, which cited unnamed sources.
Want more news? Subscribe to CPI’s free daily newsletter for more headlines and updates on antitrust developments around the world.
