Cashfree Payments offers a lending solution for NBFCs and LSPs

The solution will enable non-banking financial companies (NBFCs) as well as their partner lending service providers (LSPs) to comply with new digital lending guidelines. Through this solution, Cashfree Payments will support both digital lending and co-lending use cases. 

The Reserve Bank of India has prescribed that all fund-flows relating to loan disbursement and repayment must take place directly between the bank account of the lender and borrower, without any pass-through or pool account of any third party. 

There are three limited carve-outs to this general rule, and they apply to: 

• Co-lending transactions initialised by banks and NBFCs in accordance with the existing regulatory instructions issued by the RBI.
• Disbursements to third parties pursuant to specific end-uses of the loans.
• Disbursements covered exclusively under the statutory or regulatory mandate of the RBI or any other regulator.

The highlights of Cashfree Payments’ solution include the facilitation of borrower identity and bank account verification, the creation of lender escrows, seamless loan disbursements direct to borrowers, managing multiple LSP partnerships, and efficient reconciliation. Repayments through e-NACH and UPI AutoPay are also enabled in compliance with the guidelines. 

Officials from Cashfree payments have stated in the company press release that the digital lending and co-lending segments in India have seen rapid growth due to the country’s high fintech adoption. This high adoption has brought a need for compliant and scalable solutions for loan disbursals, loan repayment, and KYC verification. 

According to livemint.com, India-based lender SBI has invested in Cashfree Payments in light of the company’s role in creating a robust payments ecosystem. In order to build and maintain the payments and banking infrastructure that powers its products, Cashfree Payments works with leading banks and integrates with platforms such as Wix, PayPal, Amazon Pay, Google Pay, and Paytm.

Cashfree Payments launched an API banking solution 

In October 2022, Cashfree Payments launched an API banking solution named  Issuance to enable businesses to launch prepaid cards and wallets. 

Issuance is a prepaid card and wallet issuance API stack that can be used for payroll and incentive disbursals, customer loyalty programmes, and expense management. The solution also allows businesses such as fintechs and platforms to launch co-branded and mono-branded prepaid cards, both physical and virtual, and wallets for their customers, partners, and employees. 

Cashfree Payments representatives have stated in the company press release that the launch of the Issuance solution supports the company’s plans to accelerate payments in India.