paragraph

The Reserve Bank of India’s (RBI) move to restrict prepaid payment instruments (PPIs) to load from credit lines is likely to affect buy now pay later (BNPL) customers. Last week, the RBI wrote to non-bank PPI issuers telling them that the regulator <a target="_blank" href="https://www.thehindu.com/business/rbi-stops-non-bank-ppi-issuers-from-loading-wallets-cards-via-credit-lines/article65550360.ece">didn't permit loading such instruments</a> from credit lines.

Such practice had to be stopped and the violation may attract penal action under the Payment and Settlement Systems Act, 2007, the RBI communication stated.

The RBI communication said the <a target="_blank" href="https://www.rbi.org.in/Scripts/BS_ViewMasDirections.aspx?id=12156">PPI master direction</a> doesn't permit loading of PPIs from credit lines. The regulator was clear that when one regulated entity is permitted to carry out a business with authorisation, another entity cannot conduct the same without a license in the name of innovation.

The RBI diktat sent the industry players into a tizzy. Some industry associations such as Digital Lenders Association of India, Fintech Association for Consumer Empowerment, as well as the Payments Council of India are now approaching the regulator for clarification.

One <a target="_blank" href="https://www.business-standard.com/article/economy-policy/rbi-examining-ppi-credit-bnpl-models-in-talks-with-fintechs-on-concerns-122062401051_1.html">report</a> suggested that the RBI is now examining the practices and models of BNPL service providers days after the banking regulator clarified its stance that regulated activities that require licence can’t be practices by fintech players.

<h3>BNPL at an early stage in India</h3>A study recently carried out by Kotak Institutional Equities Research stated that BNPL (Buy now pay later) schemes are gaining healthy traction in the Indian market. There are nearly 8-10 million customers who are part of the BNPL universe.

The study also concluded that business model around BNPL is still at an early stage of evolution and, perhaps, still not fully developed. The study said the consumers who have a BNPL account are not very different from regular customers but they show a higher delinquency performance on their credit card and personal loan accounts.BNPL consumers are more likely to open a new credit card account within six months of BNPL loan, stated the study. The propensity to avail a personal loan also seems higher for BNPL consumers.&nbsp;

BNPL schemes under a cloud as RBI imposes restrictions on prepaid payment instruments

Soon after the RBI restrained prepaid payment instruments from loading via credit lines, there is a growing concern over the future of BNPL schemes

To keep pace with price volatility, ICICI Prudential Mutual Fund rolls out booster SIP

New rules make it easier to invest in REITs and InvITs; All you need to know

How to save on premium outgo in health insurance policy?

These focussed mutual funds gave more than 15 percent in past three years

What are direct mutual funds? Are they better than their regular counterparts?

GST Council meet: Exemptions on curd, paneer, other mass products to be slashed?

Is this the right time to lock your savings in long term FDs?

Banks to seek govt’s intervention on TDS on loan waivers: Report

Food export bans, from India to Argentina, risk fueling inflation

Nifty to see a profit booking soon; financials, hospitality look attractive, says Vinit Bolinjkar of Ventura Securities

Bolinjkar believes financials will continue to do well while the hotels and hospitality industry also looks to be in a sweet spot.

Gifting stocks? These are the points to remember if you want to save tax

Towfiqu Barbhuiya

Stock gifting is transferring stocks from your demat account to the demat account of a family member or acquaintance. Giving stock as a gift has never been easier and it comes with a slew of advantages. Read the article to learn more about how this happens.

What is blue aadhaar? An ID card for kids below the age of 5

Baal Aadhaar is a blue-colored identification card for children under the age of five. When a kid is 5 years old, the Baal Aadhaar card is updated for the first time; a second update is then required after the child turns 15.

A snapshot of fund manager Samir Rachh's investing lessons

Investing is not a game. It is the outcome of a well-planned strategy to ensure that you park money in the right options for the right reasons.

Asian markets fall on fresh fears over Fed rate hike

Tokyo, Hong Kong, Sydney, Shanghai, Seoul, Taipei, Wellington and Manila were all well down.