Foodtech giant Zomato is reportedly in discussions with several non-banking financial companies (NBFCs) to reintroduce working capital loans for its partner restaurants, signaling a potential revival of its lending services after a hiatus.
According to sources cited by Moneycontrol, Zomato aims to function as a loan service provider (LSP) under the proposed arrangement. As an LSP, the company would secure loans from its partners and extend them to eligible borrowers, charging a fee for its services, which may include responsibility for collection from end users.
Regulatory Framework
The Reserve Bank of India (RBI) defines an LSP as an agent of a regulated entity (RE) authorized to perform various functions on behalf of the lender, including customer acquisition, underwriting, disbursement, servicing, and collection.
Recent Developments
Zomato’s move towards reentering the lending space follows its voluntary surrender of its payment aggregator license earlier this year, a decision facilitated by RBI’s approval in January.
In 2022, Zomato established its wholly-owned non-banking financial company (NBFC), Zomato Financial Services, but is still awaiting the NBFC license.
Strategic Initiatives
Previously, Zomato incorporated Zomato Payments Private Limited (ZZPL) to operate as a payment aggregator, partnering with NBFCs like Neogrowth, InCred, and Indifi. The company’s intention was to consolidate its financial operations, encompassing lending and payments.
To spearhead this initiative, Zomato appointed Akshay Gautam, previously associated with lending partner Indifi Technologies, as Assistant Vice President (AVP).
Industry Context
Zomato’s lending endeavors echo those of its counterpart Swiggy, which initiated lending activities in 2017 through the “Capital Assist” program, collaborating with NBFCs such as Indifi, Incred, FT Cash, PayU, and IIFL.
