The RBI's action against high interest rates and non-compliance with regulations has caused stress among FinTech firms that rely on co-lending partnerships with large NBFCs.
The crackdown on unsecured lending indicates a tightening regulatory environment for sub-prime lending in the FinTech sector.
Increased scrutiny and potential further actions have led to a reassessment of risks, resulting in stricter underwriting processes, slower disbursals, and negatively affected growth in the unsecured lending market.
Despite an investment by MUFG Bank in DMI Finance, the company is likely to face lower growth as a result of the RBI's actions.