The Reserve Bank of India rejected Chaitanya India Fin Credit, which is backed by Flipkart co-founder Sachin Bansal, for an ‘on tap’ universal banking licence on Tuesday.
Along with Chaitanya India, the central bank turned down applications for universal banking licences from UAE Exchange and Financial Services Limited, The Repatriates Cooperative Finance and Development Bank Limited, Pankaj Vaish and others.
VSoft Technologies Private Limited and Calicut City Service Co-operative Bank Limited also had their applications for ‘on tap’ small finance bank licences refused.
The RBI has yet to provide any explanations for the rejection of applications. The central bank has just announced that the applicants for universal banking and small finance bank licences were not considered appropriate under the rules.
Chaitanya India is a subsidiary of Navi Technologies, a financial unicorn. Commenting on the RBI’s decision, Bansal said, “We have to go back and analyse this. RBI has just announced the bank licence. We are going to understand what happened, and what was the reason for the step. There will be potentially an appeal process after this.”
Bansal was speaking during a press conference to announce that Navi Finserv, a subsidiary of Navi Technologies, had raised INR 600 crore through non-convertible debentures (NCDs).
“Lots of options are in front of us. It is not the end of the road for us. I think we will have to wait for RBI’s written response, then chart the course for the future,” Bansal added.
He also stated that Chaitanya India will reapply for a banking licence if nothing changes.
Navi Finserv is generating INR 600 crore through public bond issuance, the first of its kind for an Indian fintech company.
According to Navi Technologies’ latest draft red herring prospectus (DRHP), the fintech unicorn would issue secured, redeemable NCDs for INR 300 crore, with the option to retain oversubscription for another INR 300 crore, for a total of 6 million NCDs for INR 600 crore.
The company announced the specifics of the deal the same day.
The edition will be available from May 23 until June 10. The issue has been assigned an Ind A/Stable rating, with Navi providing at least 110 % security coverage.
The minimum application size is INR 10,000, with a maximum tenure of 27 months. According to Navi Technologies, the NCDs’ effective yield will be as high as 9.80 %.
During the nine months ending December 31, 2021, Navi Finserv disbursed INR 2,000 crore in loans, according to an investor presentation. It currently solely offers personal loans, which are its most popular product, and home loans.