Fintech

Razorpay, Cashfree halt payout services to fintech lenders

Pratik Bhakta

October 17, 2022 | 7 Min Read

The two payment companies are digital lenders’ preferred platforms for loan transfers and collections. But they have stopped processing disbursals following RBI’s latest diktat on how funds should flow to borrowers

The real impact of the Reserve Bank of India’s tighter rules for digital lending is becoming clearer by the day. And as expected, checkpoints and complications are increasing for an industry not used to treading gingerly.

The directives, issued last month, stress that credit disbursals and repayments should happen directly between the regulated entity (a bank or an NBFC) and the borrower’s accounts. No detours or stopovers.

The way things have worked so far is that fintechs source funds for disbursals from legacy lenders and get payment startups to swiftly process loan transfers and collections. The system, which made life easier for everyone, fetched substantial revenue for payment startups before the RBI’s mighty pen upset this cosy relationship.

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