SUMMARY
Niyo has said that it is working with the partner bank to resolve the issue and is hopeful of a quick resumption of the International transactions
Niyo launches ‘Zero forex secured credit cards’ to address the concerns of the customers
Another fintech player Vested Finance has also temporarily stopped the processing of fresh deposits for its Rupee wallet Vested Direct owing to the RBI order
A day after the Reserve Bank of India (RBI) directed the State Bank of Mauritius (SBM) India to stop all transactions under the Liberalised Remittance Scheme (LRS), fintech startup Niyo has emerged as an unlikely collateral damage.
In an order dated January 23, RBI directed SBM Bank India to stop all related transactions till further orders citing material supervisory concerns. The move is said to have directly affected neobank Niyo which operates the ‘Niyo Global Card’ in partnership with SBM Bank.
“Lot of foreign travellers take @theniyo for FX. Really concerned about potentially 10’s of 1000s of Indians stuck abroad without access to their money. This clearly goes against the grain of protecting customer interest and do hope it’s resolved soon,” tweeted a user.
As questions poured online and on its community page about the status of the travel debit card, Niyo responded back with its own set of clarifications online.
The neobank conceded that international transactions on its debit card product were temporarily paused, adding that it was working with the partner bank to resolve the issue.
In the meanwhile, the neobank has launched ‘Zero forex secured credit cards’ to alleviate the concerns of the customers.
“However, we have made Zero forex secured credit cards available to you to assist with this temporary situation. You can avail credit card immediately and start using virtual card on your app for all International ECOM transactions… You can order a physical Secure Credit Card and the same would be delivered free of cost to your registered communication address within 7-10 days. The card will work seamlessly at all International ATMs, POS, Ecommerce,” said Niyo.
“At Niyo, we are dedicated to delivering a seamless and rewarding experience to our customers. Our SBM Niyo Global program provides an international debit card with a savings account in partnership with SBM Bank India, a RBI-regulated Bank. Currently, international transactions on this debit card are paused in order to comply with the recent RBI order. However, users can continue using the card for their domestic spends and transfers through various transactions and payment modes – ATM withdrawal, UPI, IMPS, POS, e-commerce, etc. Further, we are closely working with SBM Bank India and remain hopeful for an early resumption of international transactions through the debit card,” said a Niyo spokesperson.
Not just Niyo, other companies were also affected in the melee. Vested Finance, which operates a platform to enable Indians to invest in US stocks, has also temporarily stopped the processing of fresh deposits for its Rupee wallet Vested Direct.
“The Reserve Bank of India (RBI) issued an order instructing the State Bank of Mauritius (SBM, India) to halt all transactions under the Liberalised Remittance Scheme (LRS) until further notice. And as you may know, Vested’s cost-effective instant funding product Vested Direct is powered by SBM India. As a result, we will pause processing fresh deposits via Vested Direct,” said the company in a blog.
Meanwhile, questions continue to emerge as to what the next recourse for many of the travellers stuck abroad or preparing to leave the country would be. While there is no clarity on what will happen to users while they wait for physical delivery of cards, many have flagged concerns around SBM Bank and the sudden order from RBI. For now, the spotlight continues to be on users stranded in foreign countries without any means of cash.
(This story has been updated to include Niyo’s statement.)
