The RBI's Fear of the FLDG Model

FinTechs offer to guarantee defaults up to 20% If there's source loans from the NBFC worth 10 crore rupees The FinTech would take the hit for up to 2 crore rupees of defaults That was the first loss that was guaranteed. Some FinTechs even offered guarantees of 100% It was a humble brag of sorts A statement of how confident they were in their credit underwriting methods But the RBI was quietly watching all these developments from the side Until they realized it could not go on like this anymore And slowly but surely it began to clamp down In June 2022 it told FinTechs that they can't load PPIs with credit It was called prepaid for a reason some Fin