State Bank of Mauritius (SBM) India has recently informed its card-fintech partners to instantly stop onboarding new users for its co-branded credit prepaid card product, reported Economic Times.
This has impacted several startups in the space. The note was sent to all partner fintech companies earlier this week.
The development comes after the Reserve Bank of India (RBI) released digital lending guidelines last week.
“They (SBM) have sent out a note on new user additions. They are quite apprehensive following the RBI guidelines last week but there are meetings lined up with the bank later this week. For now, the note says about pausing onboarding of new users,” one person who was briefed on the matter said.
In its first leg of guidelines for the digital lending industry, the RBI clarified that all loan disbursals and repayments should be executed between the bank account of the borrower and the regulated entity.
Industry sources said there was no clarity yet as to what happens to existing users of prepaid card users such as Slice but that a clear picture can emerge following a proposed meeting later this week.
SBM was one of the only banks to have continued support for the card-fintech industry even after the RBI sent a communication to industry stakeholders to stop prepaid payment instruments (PPIs) from being loaded through credit lines.