Synopsis
India's leading fintech firms, once disruptors, are now actively seeking regulatory licenses to ensure sustainable growth. Companies like PB Fintech, Mobikwik, and Paytm are pursuing multiple licenses across payments, lending, and wealth management. This strategic shift allows them to manage the entire customer lifecycle and capture greater revenue, driven by regulatory nudges and investor confidence in licensed operations.Listen to this article in summarized format
PB Fintech, Mobikwik and Paytm – the big boys in the business - are all chasing multiple regulatory licences. Unlisted players are following in their footsteps, choosing to sacrifice their innovative independence for the cushion of regulations to build sustainable revenue streams across payments, lending and wealth management.
Merchant-focused payments processor BharatPe acquired a 51% stake in NBFC Trillionloans Fintech in 2023 and has since raised its holding to 76% through subsequent infusions. It is now seeking regulatory approval to take that to 100%, and plans to rebrand the lending firm as BharatPe Capital, according to people familiar with the matter.
In one voice
"The financial regulators want technology-led companies to become regulated entities. At Mobikwik, we believe that is the way forward as well," said Bipin Preet Singh, chief executive officer, Mobikwik.
The Gurugram-based fintech, which operates a mobile wallet business, recently secured an NBFC licence from the Reserve Bank of India (RBI) and a stockbroking licence from the Securities and Exchange Board of India (Sebi). It also received the payment aggregator licence from the RBI recently.
PB Fintech, which has focused primarily on distribution, has taken a payment aggregator licence for PB Pay, secured a stock broking licence last week and is pursuing an OBPP (Online Bond Platform Provider) licence to sell corporate bonds.
Paytm, run by listed entity One97 Communications, is attempting to recover its mobile wallet licence from the RBI, which it lost after the central bank shut down operations at associate entity Paytm Payments Bank.
Founder Vijay Shekhar Sharma has said the company remains committed to reinstating the wallet licence. However, group CFO Madhur Deora, speaking to analysts after the March quarter results, said the company is not "super-excited" about pursuing an NBFC licence.
Beyond usual suspects
The trend extends beyond listed companies. Flipkart secured a lending licence in June last year, while Amazon acquired fintech lender Axio to obtain its own NBFC licence. Supply chain financing startup Vayana received its NBFC licence from the RBI last year and is now scaling up its co-lending business.
A senior industry executive, speaking on condition of anonymity, said the central bank has been nudging fintechs toward becoming regulated entities. "During multiple industry interactions with the regulators, the sense that we got was that we should apply for the licence and the regulator will evaluate the applications seriously," the executive said.
The shift carries real business logic. As loan-sourcing platforms, fintechs had limited visibility over the customer's lending journey. As NBFCs and co-lending partners, they can manage the entire customer lifecycle and capture a greater share of revenue.
"Over the years the business imperative for fintechs have changed, their platforms are showing very high engagement with consumers, now as licensed entities they can manage the entire life of the customer and increase their share of revenue," said Rohan Lakhaiyar, partner at consulting firm Grant Thornton Bharat.
Increasing scrutiny
Industry insiders also note that before the RBI began closely scrutinising fintech partnerships, many of these players were already offering full-stack services in co-branded credit cards, gold loans, consumer lending and more. Regulatory action on several firms made clear that getting licensed would bring both safety and legitimacy.
Venture capitalists, who once pushed fintechs to disrupt from the outside, have also come around.
"This is a natural progression, given that VC firms realise that being regulated is good for business. Especially for a lending NBFC, the possibility of co-lending results in lower equity requirements as the AUM grows.” said Ram Iyer, chief executive officer, Vayana.
