Neobanking Startup Fi Secures NBFC Licence From RBI

Bengaluru-based neobank Fi, which counts Peak XV and Temasek among its backers, has become the latest fintech startup to secure a non-banking financial company (NBFC) licence from the Reserve Bank of India (RBI).

Fi cofounder and chief executive officer Sujith Narayan announced the news in an internal memo to employees on April 29. 

Inc42 has not accessed the memo in question and Narayan declined to comment on Inc42’s queries on the development.

“This gives us access to several direct integrations from bureaus to risk databases that help our product in more ways than one. We can now experiment with lending without external dependencies. This also sets the ground for the next set of licences that we intend to seek this year. It’s usually the first licence that takes the most time and effort!,” Moneycontrol quoted Narayan as saying.

Founded in 2019 by Narayan and Sumit Galwani, Fi is a money management app that offers users a zero-balance savings account, helps plan investments in mutual funds and keep track of expenses.

In India, it is in direct competition with fintech startups Freo, Niyo, Bright and Jupiter among others.

In 2022, Fi bagged $45 Mn in a Series C funding round led by Alpha Wave Ventures.

An NBFC licence would allow Fi to offer loans to customers from its own books and eliminate the need to rely on other loan sources such as banks and other NBFCs.

The development comes at a time when fintech startups have been making a beeline to get a NBFC licence from India’s banking regulator.

Among those who have applied for an NBFC licence include fintech unicorn OneCard and fintech startup WintWealth.

Meanwhile, fintech majors Cred and Jupiter and microlending startup ftcash have already been issued an NBFC licence by the RBI.

Last year, it was reported that the RBI was reluctant to grant NBFC licences to fintech startups, mainly due to concerns related to ownership of these fintechs and the origin of capital flowing into the firms.

Digital lending has become a lucrative business opportunity for India’s fintech players. According to Inc42’s ‘State of Indian Fintech Report Q4 2023’, the lending tech opportunity in the country is expected to reach $1.3 Tn by 2030.