Vantage Point by EMVC | 9th June, 2023
Key insights and important developments in fintech ecosystem from the past week by Emphasis Ventures.
India’s fintech ecosystem got a new lease on life thanks to RBI’s new guidelines for lending default guarantees. This new development is important, especially as India’s non-bank lending grew 24% YoY (FY22 to FY23). PhonePe launched a new Account Aggregator feature while Bajaj Finserv launched its mutual fund business. There’s also insights from the latest report by Google, Bain and Temasek on India’s economy.
The Reserve Bank of India in its June, 2023 Monetary Policy Committee (MPC) meeting decided to keep the interest rates unchanged at 6.5% in the backdrop of moderating inflation and resilient economic growth. Notably, it released guidelines to formalise a regulatory framework for permitting Default Loss Guarantee arrangements between banks and fintech companies. Other major announcements in the MPC related to the fintech ecosystem are:
Permitted non-bank prepaid payment instruments (PPI) issuers to issue e-RUPI vouchers.
Permitted banks to issue RuPay Prepaid Forex cards.
India’s non-bank lending disbursements grew 2% YoY in Q4 FY23 (ended 31st Mar, 2023) to $ 54bn and full year lending grew 24% YoY to $ 205bn.
Consumer payments company PhonePe launched Account Aggregator (AA) services on its platform this week. This will enable its users to digitally share and manage consent on usage of their financial data with regulated FIs. Currently, 1Bn+ Indian bank accounts are accessible on the AA platform and 2mm+ users and growing are sharing their data with banks every month.
One of the largest non-bank consumer lenders in India, Bajaj Finserv, is launching its mutual fund business starting with fixed income products. Notably, top 8 asset managers in India control ~74% of the Industry's AUM. While the $500Bn mutual funds industry in India is crowded, the AMC will likely see strong cross-sell synergies with its existing base of 100mm+ borrowers.
Weekend read - Google, Temasek and Bain's report on India's internet economy: " A continued shift in consumer and merchant behaviour, matched with strong investor confidence, has ushered India into its ‘Digital Decade’ and set the country on a path to reach a $1T internet economy by 2030."
We’ll be back next week with key insights and important developments in fintech ecosystem. Subscribe to Vantage Point to be the first to receive these updates straight in your inbox.
Melissa Frakman
Founder and General Partner