Fintech startup Uni suspends card service in the wake of RBI’s digital lending norms

Bengaluru-based fintech startup Uni Cards has decided to suspend its card services following the Reserve Bank of India’s (RBI) guidelines on digital lending that bars loading of Prepaid Payment Instruments (PPIs) via credit lines.

“We have decided to proactively suspend card services on our products—the Uni Pay 1/3rd Card and the Uni Pay 1/2 Card. This process will begin in phases for our customers starting today, and will be concluded by Monday, August 22,” the company said in a statement issued on Friday. 

The fintech startup said its customers will have access to its credit lines through Uni Cash—a mobile banking platform that transfers users’ credit lines directly to their bank accounts. It has also decided to extend a zero-charge partial limit on Uni Cash till September 21, “as many of its customers rely on its credit lines”. 

“Bearing the fact in mind that the Uni Card is used for urgent needs like fee payments, medical bills, and emergencies, we have ensured that every one of our customers will have access to their credit line through Uni Cash. With a free partial limit enabled, our customers will not face any disruptions while using their funds,” said Founder and CEO Nitin Gupta. 

He added, “We are building something really exciting. Like always, it’s first-of-a-kind and never been done before.”

In June, the RBI had asked non-bank PPI issuers to not load their PPI instruments through credit lines. The circular came down heavy on fintech players who offer credit lines to customers via their wallets in association with non-banking financial companies (NBFCs). 

The central bank’s decision has also affected fintechs issuing prepaid cards in association with a banking partner or a non-banking partner. Uni offers credit via its prepaid card partner State Bank of Mauritius (SBM) India. 

On August 10, the RBI also issued the first set of guidelines for digital lending, which addresses concerns consumers had raised regarding digital lending platforms.

Following this, State Bank of Mauritius India, the prepaid card partner of Slice, Uni, and PayU’s LazyPay, sent a communication to the three startups, saying that it will pause the onboarding of new customers, Moneycontrol had reported.