Sachin Bansal’s company fails to get Indian banking license –

India’s central bank has turned down Chaitanya India Fin Credit’s application to be allowed to bank in a major setback for Flipkart billionaire Sachin Bansal, who was looking to float his newer venture, Navi.

The Reserve Bank of India on Tuesday rejected four applications, including Bansal’s Chaitanya (the microfinance unit of Navi Technologies), because they were “deemed “unfit” to run full-fledged banks in the world’s second most populous market.

Tuesday’s decision is a major blow to Bansal, who has been seeking a banking license for years. A license would have paved the way for Bansal’s company, which offers customers insurance and loan products, improves its financial situation and launches additional products.

A full banking license in India would have enabled Navi to accept deposits from customers and then use those funds to lend to others. (Otherwise, companies would have to look to other banks and funding sources, where it would cost them more interest to borrow money.) A license would also have enabled Navi to transact international and launch its own credit cards, a fintech executive who said anonymously. explained.

Bansal, who was separately present during this announcement, said Navi will analyze the central bank’s decision and evaluate options. Bansal, co-founder of Flipkart, left the e-commerce giant in 2018 and founded Navi the same year. He has marketed Navi as a financial company that understands technology.

“We’ll Ask” [the] RBI the reason behind this decision. There could be an appeal from us against this decision,” he said, adding that the decision was “not the end of the road” for the startup.

Navi, which filed a $440 million IPO earlier this year, applied for a banking license in early 2020. The startup previously tried to launch a financing round with a valuation of more than $4 billion and reached out to a number of investors, including SoftBank, but fell after the inability to secure the license, previously reported.

Local media reports in recent quarters have stated that Navi allegedly violated currency rules, struggled to maintain good governance within the company and failed to responsibly handle personal and sensitive customer data.

The other three companies that failed the RBI’s cut for universal banking license are UAE Exchange, the Repatriates Cooperative Finance and Development Bank and a proposal from former Citibank executive Pankaj Vaish. The RBI has been very conservative in issuing banking licenses in the country. In the past 10 years, only a handful of companies, including Bandhan and IDFC First.