Blitz Bureau
Walmart’s Flipkart has secured a lending licence from the Indian central bank and banking regulator, enabling it to offer loans directly to customers and sellers on its platform, a spokesperson for the company confirmed after Reuters reported the development citing documents and a source.
This is the first time the Reserve Bank of India has granted a large e-commerce player in India a non-bank finance company (NBFC) licence, allowing it to lend but not take deposits.
Most e-commerce platforms currently offer loans in tie-ups with banks and NBFCs, but a lending licence will enable Flipkart – India’s largest e-commerce firm – to lend directly, a more lucrative model for the group.
The central bank issued its certificate of registration – a document that officially recognises a company as an NBFC – to Flipkart Finance Private Limited on March 13.
Reuters has reviewed a copy of both the certificate of registration and the approval letter also dated March 13. The approval has not been previously reported.
Flipkart, in which US retail behemoth Walmart holds a more than 80 per cent stake, applied for the licence in 2022, according to the central bank’s approval letter.
The Reserve Bank of India did not immediately respond to Reuters’ request for comments.
The e-commerce giant may commence its lending operation “in a few months”, according to a source aware of the matter who declined to be identified as the talks are private.
A final decision on the launch will be subject to the completion of various internal processes such as the appointment of key management personnel and board members and the finalisation of business plans, the source said.
Flipkart plans to lend directly to its customers on its popular e-commerce platform and through its fintech app super.money, the source said. It may also offer financing to sellers on the platform, they added.
At present, the e-commerce giant offers personal loans to customers through tie-ups with lenders such as Axis Bank, IDFC Bank and Credit Saison.
Flipkart, last valued at $37 billion in 2024 when it raised $1 billion in a funding round led by Walmart, is shifting its holding company from Singapore to India. Walmart also aims to take the 17-year-old company public.
Walmart bought a controlling stake in Flipkart in 2018, which also gave it ownership of PhonePe, a fintech firm also preparing for an IPO.
Earlier this year Flipkart’s rival Amazon acquired, a Bengaluru-based non-bank lender Axio, but the deal is yet to be cleared by the central bank.
By obtaining an NBFC licence, Flipkart can now offer credit directly to its customers and sellers without relying on third-party financial institutions. This move allows for greater control over the lending process, potentially leading to more personalised and efficient financing options. It also positions Flipkart to better compete with global e-commerce giants that have integrated financial services into their platforms.
This strategy also aligns with the broader trend of embedded finance, where non-financial companies offer financial services to enhance customer engagement and create new revenue streams. As Flipkart prepares for a public listing, diversifying its services to include financial products could make it more attractive to investors and consumers alike.
As of 2023, India had approximately 9,480 non-deposit-taking Non-Banking Financial Companies (NBFCs) registered with the Reserve Bank of India (RBI). Among these, a significant number are engaged primarily in lending activities.
NBFCs in India are categorised based on their primary functions. One such category is the Investment and Credit Companies (ICCs), which focus on lending and investment activities. Additionally, there are NBFC-Micro Finance Institutions (NBFC-MFIs) that provide small-ticket loans to economically disadvantaged groups. While exact numbers for each category aren’t specified, these classifications indicate a substantial portion of NBFCs are primarily involved in lending.
They do it too
Flipkart’s strategy aligns with global trends where e-commerce platforms are integrating financial services to enhance customer experience and drive growth.
Some of the global parallels to Flipkart’s lending model are:-
Amazon (USA): Amazon offers various credit products, including installment plans and branded credit cards, to consumers and small businesses. While it does not directly offer Buy Now, Pay Later (BNPL) services, it provides 12-month financing options through its store card.
Shopify Capital (USA): Shopify provides merchant cash advances and loans to sellers on its platform. The eligibility and loan amounts are determined using algorithms that assess the merchant’s sales data, facilitating quick and tailored financing solutions.
Affirm and Klarna (USA & Europe): These companies have pioneered the BNPL model, allowing consumers to split purchases into interest-free installments. Their services are integrated directly into the checkout process of various online retailers, enhancing purchasing power and flexibility for consumers.
Zopa (UK): Originally a peer-to-peer lending platform, Zopa transitioned into a digital bank offering personal loans, credit cards, and savings accounts. This evolution demonstrates the potential for fintech companies to expand their services and become comprehensive financial institutions.
Harmoney (Australia & New Zealand): Harmoney started as a peer-to-peer lender and later shifted to funding loans directly from its balance sheet. It offers unsecured personal loans using proprietary AI and machine learning models to assess creditworthiness.