RBI cautious of fintech cos’ automobile mortgage drive, ETCFO
The proliferation of fintech gamers within the mild business automobiles and two-wheelers financing area has caught the attention of the regulator. The Reserve Financial institution of India (RBI) has red-flagged the aggressive onboarding of consumers throughout its interactions with the trade, because the observe concurrently hurts monetary self-discipline of debtors and stability sheets of the lenders.
Officers within the know mentioned that the regulator’s fear stems from the truth that some fintech firms are tapping first-time patrons of used automobiles and the driver-cum-owner segments—essentially the most weak to unsustainable borrowing
On the finish of June 2025, fintech lenders had disbursed complete loans valuing INR 37,676 crore as per knowledge with Fintech Affiliation for Shopper Empowerment (FACE), an RBI-recognised self-regulatory organisation within the fintech sector. Sources inside the trade say that lower than 10% of this was in the direction of used automobiles and first-time patrons. “In frequent interactions with fintech gamers the regulator has red-flagged vulnerabilities in financing first-time patrons of used automobiles, who stay weak on the asset high quality entrance,” mentioned one of many officers within the know.
In August this 12 months, the regulator had additionally mentioned that some banks and non-banking monetary firms weren’t following norms on top-up loans pertaining to the “mortgage to worth” (LTV) ratio and the monitoring of the top use of funds.
These fintech lenders have been additionally offering assist to present debtors within the type of top-up loans for functions corresponding to tyre alternative, insurance coverage buy, filling up gas, working capital wants, as nicely for consumption functions.
“Extreme loan-to-value ratios and top-up loans have witnessed a downward pattern, particularly within the used automotive phase after the rise in delinquency and the warning issued by the regulator just a few months in the past,” mentioned one other individual. In October this 12 months, the regulator had directed Sachin Bansal’s Navi Finserv, Asirvad Micro Finance, Arohan Monetary Providers and DMI Finance to stop and desist from sanction and disbursal of loans. The RBI cited materials supervisory issues associated to mortgage pricing practices. The ban on Navi was lifted final week.
The MFI and fintech trade have been grappling with the problem of consumers having greater than 4 loans with a complete excellent of greater than INR 2 lakh. Within the June 2024 version of Monetary Stability Report, the RBI raised the purple flag on excessive delinquency ranges of fintech lenders.
“NBFC-fintech lenders have the very best share in sanctioned and excellent quantities; in addition they have the second highest delinquency ranges, solely beneath that of small finance banks,” the RBI had mentioned talking about private loans beneath INR 50,000.
The banking regulator went on to state that classic delinquency, which is a measure of slippage, remained comparatively excessive in private loans at 8.2%.
“Little greater than a half of the debtors on this phase have three stay loans on the time of origination and greater than one-third of the debtors have availed greater than three loans within the final six months,” the regulator had said within the report.
