SUMMARY
Ola acquired Avail Finance in March 2022 for a reported $50 Mn
The mobility startup's move comes when the digital lending segment has come under scrutiny from the RBI
Ola is working on a new lending service and the customers would be able to access it via its apps
Ola will reportedly be shutting down its recently acquired Avail Finance App and integrating it into Ola Money. Further, going ahead with its integration plan with Ola Money, Ola Financial Services has stopped lending to customers via Avail Finance.
The move also comes as Ola has been losing deadwood by shutting down verticals which are burning cash. Last year, it shut down the infotainment service Ola Play, the used cars platform Ola Cars and the quick commerce vertical Ola Dash.
According to a source cited by an ET report, in the Avail Finance case, Ola stopped disbursing loans in December 2022 and will only be making collections throughout 2023, as the lending vertical only offered one-year loans. Further, the mobility startup is working on a new lending service and the customers would be able to access the same via the Ola app and the Ola Money app, according to the aforementioned report.
“Avail’s services have been integrated with Ola Financial Services. We are now offering products and services to drivers and customers through Ola Financial Services,” the company said in a statement.
It is prudent to mention that Ola acquired Avail Finance in March 2022 for about $50 Mn. The deal generated a lot of buzz because Avail was founded by Ankush Aggarwal, the brother of Ola’s founder Bhavish Aggarwal.
Founded in 2017 by Ankush Aggarwal and Tushar Mehndiratta, Avail Finance offered short-term loans to the blue-collar workforce including gig workers in India. The startup offered loans starting from INR 5,000 and an advance salary of up to INR 10,000.
Ola Financial Services provides fintech services to various Ola entities, including Ola Money, which is an e-wallet service available for mobility customers.
Further, Ola cross-sells other financial services such as financing for its electric vehicles (EVs) and insurance products for both EV buyers and ride-hailing customers. Ola’s insurance products not only include insurance for every ride a customer takes, but also health, gadget, motor and travel insurance.
The startup also offers a buy-now-pay-later (BNPL) service called Ola Money Postpaid. There is also Ola Money Postpaid Plus, which can be used with external merchants while the regular version is only available for ride-hailing with the company.
Ola’s move comes at a time when the fintech segment, specifically the digital lending segment, has come under intense scrutiny from the Reserve Bank of India (RBI).
The RBI has recently reduced the role of fintech companies without an active non-banking finance company (NBFC) licence to just loan services providers, putting more responsibility on regulated entities.
Avail Finance tried to acquire an NBFC licence by acquiring Art Climate Finance (India) Pvt Ltd in 2021. However, it did not receive the required regulatory approval to proceed with the acquisition. Before being acquired by Ola, Avail had lending partnerships with Vivriti Capital, Apollo Finvest India and Pinnacle Capital Solutions, among others.
