Card-fintechs suffer a setback as SBM Bank halts onboarding new users

19 Aug 2022 , 08:59 AM

One of the most active partner banks for fintech companies, State Bank of Mauritius (SBM) India, has instructed its card-fintech partners to immediately suspend onboarding new users for its co-branded credit prepaid card product.

Several start-ups in the industry have been hit by this, including partners Slice, Uni, and LazyPay.

All of the partner fintech companies received the note earlier this week.

Reserve Bank of India (RBI) established guidelines for digital lending last week, which led to the current event.

According to news reports, Slice, the unicorn credit card rival, has temporarily halted issuing new prepaid cards but is still onboarding customers via the Unified Payments Interface (UPI) network using free EMIs and fund transfer services.

RBI made it clear in its initial set of rules for the digital lending sector that all loan disbursements and repayments must be carried out between the borrower’s bank account and the regulated firm.

Reports claim that in May, the fintech sector issued between 500,000 and 700,000 new prepaid cards.