India-based fintech Uni has temporarily suspended its card services in South Asia following the local central bank’s guidelines on digital lending. Uni plans to suspend card services on its products (Uni Pay 1/3rd Card and the Uni Pay 1/2 Card) and expects to roll out the change to the entire customer base by 22 August 2022.

The move follows SBM Bank India, which partners with several Indian fintechs to launch co-branded cards, informing Uni and a number of other startups earlier this month to halt onboarding new customers. Uni’s officials stated that due to the latest RBI guidelines on digital lending, they are proactively suspending their card services in phases by 22 August 2022. Bearing the fact in mind that the Uni Card is used for urgent needs like fee payments, medical bills, and emergencies, they have ensured that every one of their customers will have access to their credit line through Uni Cash.

RBI’s regulatory framework On 10 August 2022, The Reserve Bank of India released its regulatory framework for digital lending, following recommendations put forward by the digital lending working group in November 2021. The framework aims to mitigate regulatory concerns and is based on the principle that the business of lending can only be carried out by entities either regulated by the RBI, or permitted to do so by law. This largely applies to regulated entities and lending service providers engaged by the same.

As per Annexes contained in the framework, other authorised entities may be regulated through rules based on the working group's recommendations, while the regulation of entities falling outside of the scope of the law would require further consideration by the Government of India. The business taken into view will have to revise how they use data collected, establish a comprehensive privacy policy, not collect and store biometric data, and make sure that their information is stored in servers inside India. More BNPL providers shutting down Indian LazyPay has also temporarily stopped support in July 2022 for its Buy Now, Pay Later payment product amid rising regulatory concerns.

The product, launched by the company in September 2020, allowed users to pay through the unified payments interface (UPI) channel from a revolving credit line issued to the customer. LazyPay was issuing a credit line of up to USD 1,266 to users for undertaking online and offline transact through UPI. LazyPlus UPI had stopped onboarding new users in 2021 as banking partners pulled out of the arrangement.

The decision comes as the Reserve Bank of India sent the fintech industry into a tizzy in June 2022 after it sent a directive to industry stakeholders disallowing prepaid payment instruments (PPIs) from being loaded with credit lines. .