The scramble within India’s BNPL industry

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Editor's note: In seven days, India’s buy now pay later, or BNPL, sector seems to have gone through the seven stages of grief. There’s been shock, pain, anger, bargaining, depression, hope and acceptance, in varying degrees, in every corner of the industry. The bad news came last Monday, in the form of a circular from the Reserve Bank of India, prohibiting non-bank prepaid payment instrument operators from loading their wallets or cards with any line of credit. We wrote about this circular and its implications. A prepaid instrument, as the name suggests, is a card or digital wallet in which customers can place funds for spending at a later date. According to RBI rules, money can be loaded into a PPI either through bank accounts or debit or credit cards. But over the past few years, a number of fintech companies have been linking credit lines (usually from non-bank lending partners) to digital wallets and prepaid cards. This wasn’t explicitly disallowed, but it essentially creates a credit card-like payment product, and the RBI only allows banks and two specific bank-owned entities to …