Slice moves team from line of credit to term loans after RBI action; What effect will it have on users : Latest news 2022
Fintech Startup Slice switched from providing lines of credit through its app to conventional term loans after the Reserve Bank of India made new proposals the previous month. The Reserve Bank of India has proposed that non-bank fintechs cannot provide lines of credit. Slice was mainly affected by the change in the RBI, and now it has fundamentally changed the way it enables its customers to comply with the new regulations.
Slice notified users of the change to its app using an email sent on Tuesday.
A company spokesperson declined to comment on the matter.
The company called the new credit distribution mechanism “Purchase Power” and did not disclose that the reason for the change could be due to RBI guidelines.
How will the RBI guidelines change impact Slice’s practices?
The company mentioned in their email stating that when one purchases the Slice app, a new approval decision will be made instantly to access the best possible amount that the person can borrow for the purchase. Decisions will be made primarily based on user credibility, risk, fraud checks, and past payment and refund patterns.
The company explained the concept of purchasing power. The purchasing power is an estimated amount that one may be eligible to borrow from the installment application. It is sponsored by a world-class risk and data technology infrastructure that enables real-time underwriting and provides users with the best possible credit the application can offer at the time of transaction.
The statement basically means that the flexible and borrower-friendly repayment terms can be replaced with credit card-like services minus the fixed credit limit. Instead of offering a line of credit, Slice will now emphasize creditworthiness in every transaction, in line with RBI guidelines.
Slice has worked hard on the idea that the effort of the team is to ensure that the end customer does not suffer or suffer a significant change in experience from them.
Slice mentioned in the email that Slice’s office reporting practices will remain unchanged with the update. They further ensured that the changes did not harm the customer’s credit score.
The Reserve Bank of India proposed in June that providers of prepaid non-bank instruments such as Slice would no longer be allowed to offer lines of credit. Slice and many other fintech USPs revolve around such a product, and now they have to move on to more traditional lending methods.
The terms and conditions have been revised in two points at present. If someone was operating a non-bank PUP, they must mention in their terms and conditions that the money will not be paid into the consumer’s wallet but rather into their bank account (in cash). The overall project should be considered a term loan and not a revolving line of credit.
Additionally, Slice offers several credit features to prepaid card users including “Pay-in 3” option and interest-free monthly repayment among many other options. However, with the change in credit regulations, all loans issued to card customers will be processed in real time.
Any recalcitrance in this regard could lead to criminal prosecution under the provisions contained in the Payment and Settlement Systems Act 2007. The program warned all businesses to follow the RBI guidelines.
Slice is a Bengaluru-based unicorn or startup with a valuation of USD 1 billion or more. The company is valued at around $1.5 billion after receiving $50 million in funding in June.
Slice hit the big time shortly after its debut. The company has already passed the one million transaction mark through its app in five months after launching the first physical card in 2019. Slice has a massive user base of 12 million and currently operates in over 16 cities across the world. ‘India. The company even claimed that the platform is growing in popularity by more than 40% every month.
edited and proofread b nikita sharma