Fintech companies are now looking to diversify their operations, reports The Economic Times. This follows a move by the Reserve Bank of India (RBI) to rein in a rise in unsecured personal loans.
The apex bank announced last week its decision to increase the risk weight on assets for unsecured lending, encompassing personal loans and credit card loans. Experts say this move will make the unsecured segment more expensive for banks and NBFCs, and as a result, fintechs too.
Fintech firms are now looking at education loans, loans against property, SME/micro-SME loans, and other forms of secured lending, the report says.
“BFSI is always a highly regulated industry and rightly so, because it is dealing with people’s money,” says K B Gupta, Former General Manager at Bank of Baroda. “Fintech can be no exception. Regulations have never obstructed the business, rather these are facilitators to avoid unpleasant situations in the future.”
There is also a need to reevaluate credit policies, enhance consumer awareness, promote cyber and financial literacy to prevent over-indebtedness, and discourage the use of unauthorised lending apps, the report adds.