Flipkart secures NBFC license from RBI

Flipkart has received a lending licence from the Reserve Bank of India (RBI). The central bank issued its certificate of registration – a document that officially recognizes a company as an NBFC – to Flipkart Finance Private Limited on March 13.

First Among Indian E-commerce Giants: Flipkart becomes the first major Indian e-commerce platform to receive an NBFC licence, allowing it to lend directly to consumers and sellers.

What It Means:

• Flipkart can now offer loans directly via its e-commerce platform and fintech app, bypassing third-party banks or NBFC tie-ups.
• It cannot accept public deposits, as NBFCs are not banks and face distinct regulatory boundaries.

Benefits to Flipkart:

• Direct lending is expected to boost profitability, improve customer financing options, and offer seller credit.
• Flipkart may also scale its financial services, enhancing customer retention and ecosystem integration.

Ownership: Flipkart is majority-owned by Walmart (over 80%), which acquired its stake in 2018.

Banks and NBFCs

• Banks and NBFCs are different entities subject to different statutory and regulatory requirements. However, NBFCs lend and make investments and hence these activities are akin to that of banks.
• The major differences between banks and NBFCs are given below:
  • NBFCs cannot accept demand deposits;
  • NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself;
  • Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation (DICGC) is not available to depositors of deposit taking NBFCs.