Zomato, a major player in the foodtech industry, has reportedly initiated discussions with various non-banking financial institutions to offer working capital loans to its partner restaurants. This comes after a pause in its lending services for several years.
As per the terms of the deal, Zomato will serve as a loan service provider, as reported by sources close to the matter cited by Moneycontrol.
In its capacity as a loan service provider (LSP), the company will acquire loans from its partners and distribute the funds to prospective borrowers, levying a fee for its services. According to the report, this suggests that Zomato may also be tasked with collecting payments from end users.
An LSP, as defined by the RBI, serves as an intermediary for a regulated entity (RE), performing various functions on behalf of the lender. These functions encompass customer acquisition, underwriting support, pricing assistance, disbursement, servicing, monitoring, collection, and loan recovery for the RE.
Continue Exploring: Zomato expands beyond food, launches free weather monitoring service with 650 stations
RE pertains to financial institutions such as banks and NBFCs that are subject to the supervision and regulation of the RBI.
This comes days after Zomato voluntarily surrendered its payment aggregator license, which had been granted approval by the RBI back in January of this year.
Continue Exploring: Zomato’s subsidiary ZPPL to surrender RBI license as online payment aggregator
Zomato’s Financial Ventures: NBFC and Payment Aggregator
In 2022, Zomato established its wholly-owned NBFC, Zomato Financial Services. Nevertheless, it is still awaiting the issuance of its NBFC license for the same.
Significantly, in 2021, the food industry leader established its subsidiary, Zomato Payments Private Limited (ZZPL), to operate as a payment aggregator. It partnered with NBFCs such as Neogrowth, InCred, and Indifi for this venture.
As per the aforementioned report, armed with both payment aggregator (PA) and NBFC authorization, the company aimed to oversee the entire financial ecosystem, encompassing lending and payments.
In a parallel move, Zomato appointed Akshay Gautam from its previous lending partner, Indifi Technologies, as Assistant Vice President (AVP) to spearhead the initiative for Zomato.
Last year, Zomato introduced its in-house UPI service for both peer-to-peer and merchant transactions. However, within the same year, reports emerged stating that the company had halted the onboarding of new customers on Zomato UPI.
Swiggy, Zomato’s counterpart, also has a history of venturing into lending, beginning in 2017 with its “Capital Assist” program. This initiative involved partnerships with NBFCs such as Indifi, Incred, FT Cash, PayU, and IIFL.
Continue Exploring: Zomato’s Q4 net profit surges 27% quarter-over-quarter to INR 175 Cr
