RBI lifts Navi ban, Dua Lipa's concert sales & RuPay credit with UPI 🥶
Only the "must" know this week.
We are back with our new newsletter edition, which covers three important business topics in one go. Today, we discuss Navi’s reinstated lending license, the reality of Dua Lipa’s concert sales, and RuPay’s UPI credit movement.
RBI lifts Navi’s lending ban 🏦
First, some context.
Navi Finserv is a Non-banking financial company (NBFC) subsidiary of Navi Technologies that offers a wide variety of products, be it UPI, gold, insurance, mutual funds etc. Navi Finserv offers home and personal loans. Back in October, RBI stopped the company from issuing loans because of the interest pricing and loan rates.
How did it affect Navi?
The company’s first move was cancelling its ₹100 crore bond raise to let market perceptions settle. During this period, it focused solely on collections & servicing existing customers.
Fact.
Navi Tech (the group) is the 6th biggest UPI player in the country (bigger than Amazon Pay). Also, the entire group is founded & led by Sachin Bansal (ex-founder of Flipkart).
What’s the core bet here?
See, 90% of Navi’s loan book is unsecured personal loans under ₹1 Lakh. While the company is focussing on growing the housing loans too, the overall bet is on “consumer lending.” India’s digital consumer lending space will be $720 Billion big by 2030 (3 times from now). And Navi is coming for a piece of the pie. From micro-loans to BNPL, EMIs, credit cards, and gold loans—the signs of this boom are all around us.
Another fact.
Collectively, Indian fintech companies in the consumer lending space have raised more than $3 billion since 2014. But the challenge lies in the NPAs (non-performing assets), especially in the unsecured products in case of macro-economic headwinds like COVID.It’s interesting to see 4 players who got banned by RBI, but only the ban on Navi has been lifted. RBI has never lifted a ban on a player like this that fast. For example, PayTM Payment Gateway suspension has taken 3 years to lift.
Lessons from Dua Lipa’s concert sales 🎫
First, some context.
Dua Lipa performed in Mumbai last week. The reels of when she played the “Bollywood” bit went viral. But there’s a strange thing that happened – some Twitter users revealed that the gold passes of ~₹13,500—were available for ₹2,000 outside the venue in black, raising questions on the resale demand. In fact, the gold zone wasn’t super packed like you’d expect it to be either. Let’s dig in….
What’s the overall economic picture?
If you haven’t been paying attention so far, there is a bigger macro-play here. While on end, we are seeing people spend more on Coldplay tickets; we can’t say that for all artists. In fact, the quarterly economic growth number has fallen to 5.4% (a 7-quarter low) from 8.1% the same time last year.
How is it related?
Concerts, entertainment, & travel serve as great proxies for gauging how a country is consuming. When people start spending more on aspirational experiences, it reflects better economic picture in discretionary spending—aligning with the oldschool Maslow’s hierarchy of needs.
Is urban demand “really” falling?
Another big proxy to gauge demand is the FMCG sales — which have dropped. Economists are attributing this to rising urban real estate costs, food inflation, and slower wage growth & insane direct/ indiect taxes. Plus, interestingly, rural demand is showing an upswing, thanks to agricultural tailwinds.
RuPay’s UPI credit revolution 💳
First, some context.
UPI transactions on RuPay credit cards 2Xd in the first seven months of FY24-25. In June 2022, RBI announced the ability to link credit cards to UPI with RuPay cards. You can get these from your banks, but cards from providers like Visa & Mastercard are yet to be part of the UPI network. Plus, it’s a virtual card so you have no risk of losing it.
Why it makes sense?
It is a sweet integration of 2 user behaviours: reliance on UPI payments & dependence on microcredit (we discussed this in our first story too). UPI has become second nature and has included everyone in the wave –– from blue collar to micro-vendors, everyone can be seen with a QR scanner.
Fact.
India accounted for ~50% of the world’s real-time payments in FY23. Yes, globally. Plus, the government has added roughly 7 countries, including UAE, Singapore etc. to the UPI network. The govt. is super bullish on making this a global success story and aiming to drive spending & economic growth.
We’ll see more of this.
Users are getting smarter—building a good CIBIL score is now a priority. This shift toward using UPI credit for smaller transactions is driven by the convenience of using it anywhere, lower fees, cost benefits, and the awareness to maintain a strong credit history for the future for bigger loans like housing loans, etc.
That’s all for now. In November '24, we've got a stellar lineup of leaders who will teach GrowthX members specific nuances across product building, distribution, and strategy.
Kiran Shah (Founder, Go Zero)
Prateek Singh (CEO, LearnApp & Zero1 Media by Zerodha)
Naggappan Ramasamy (Product Lead, Paytm)
Karthi S. (Senior Design Director, Salesforce)
Abhinav Chikara (Founder, 10Kdesigners)
Gautham Krishnan (Product Leader, Disney+ Hotstar)
Pramod N (VP Product & Data Science, Rapido)
If you work in a product or marketing role, come join us and make learning a core habit every week in this fast-moving tech world.