A few days ago, my neighbour received a sleek cobalt-blue parcel. On opening it, we figured it was a complex origami of cobalt blue and white, revealing what lay inside - his brand new Slice card.
I instantly thought that the Slice packaging was a worthy metaphor for what prepaid payment instruments (PPIs) were doing to the Indian credit ecosystem. They were shinier and more attractive than standard credit card packages that un-ceremoniously glued the product onto a letter. They felt personalised and thoughtful. But even though the package unravelled quite easily, it also felt weirdly complicated.
Credit-line-backed prepaid cards like Slice had quickly become a credit-card alternative to many since their launch. They did so by breaking the barriers of high credit score requirements set by banks to issue a credit card. For many of their users, these cards were the first formal credit line.
Of course, the party had to draw the regulator's attention and come to an end. Through a June notification and then a set of digital-lending guidelines released this August, the Reserve Bank of India (RBI) came down hard on PPIs loaded from credit lines, effectively banning ~5 million credit-backed PPI cards, according to an industry estimate.
But the road does not end for fin-techs like Slice here. The companies, anticipating regulatory action, had been preparing for a hit to their lending business, we remind you how their troubles came about and how they plan to untangle themselves
