Govt asks RBI for list of legal lending apps; interview with Zomato cofounder Mohit Gupta

Also in this letter:
■ Indian investors understand digital businesses better now: Zomato cofounder
■ Tata Group in talks to join iPhone makers club
■ Twitter agreed to pay whistleblower $7 million in June settlement

India to prepare a list of approved digital lending apps

The Indian government is stepping up its scrutiny of digital lending apps to weed out those that have unethical lending and recovery practices, the government said in a notification on Friday.

Whitelist: The Reserve Bank of India has been asked to prepare a list of legal digital lending apps while the government will help ensure that only such apps conduct lending, it said.

The government has also directed the RBI to monitor accounts that may be used for money laundering. It also asked the central bank to review and, if required, cancel the licences of dormant shadow banks that unscrupulous lending apps could misuse.

What else? All other government ministries have also been asked to take all possible action to prevent operations of such apps while the corporate ministry has been directed to identify shell companies and deregister them to prevent their misuse.

The government said the central bank will also ensure that the registration of the payment aggregators is completed within a specified timeframe and no unregistered payment aggregators will be allowed to function after that.

The Ministry of Corporate Affairs (MCA) will identify shell companies and deregister them to prevent their misuse.

Various steps should be taken to increase cyber awareness for customers, bank employees, law enforcement agencies and other stakeholders, the government said.

The Ministry of Finance will monitor the actionable points for compliance on a regular basis, it added.

Driving the news: The government’s statement comes a day after finance minister Nirmala Sitharaman chaired a meeting on illegal lending apps. The meeting, attended by secretaries from the finance, corporate affairs, and information technology ministries along with officials from the RBI, came in the wake of increasing concerns around such apps.

Indian investors understand digital businesses better now: Zomato’s Mohit Gupta

The underlying opportunity for digital businesses is to invent new ways of solving customers’ problems, Zomato cofounder Mohit Gupta told us during an exclusive fireside chat at the recent ET Retail Ecommerce and Digital Natives Summit. Here are some of the themes that Gupta addressed.

On Zomato’s sustainability: “I think it is very, very sustainable. We’ve demonstrated consistently that this is not a flash in the pan. Of course, we work in a very dynamic and competitive environment and there could be times when that has an impact on temporal profitability… but I think in the long term, this business is going to be healthily profitable.”

On investor sentiment: “My message to investors is that today Indian investors – both institutional and retail – understand digital businesses much better. Having said that, one of the ways investors look at businesses is that expectations from a young, listed business are very similar to that of an FMCG company, for example.”

On issues between aggregators and restaurants: “There are a bunch of areas where we are making progress. Since some of these are larger sticky points, it may take a little more time. When a matter is sub-judice, that also has an impact on how fast we can move. I am very optimistic that we will continue to deepen our relationships with restaurant partners. It’s a symbiotic relationship.”

Tweet of the day

Tata Group in talks to join iPhone makers club

Tata Group is in talks with a Taiwanese supplier to Apple to set up an electronics manufacturing joint venture in India, seeking to assemble iPhones in the country.

The discussions with Wistron Corp are aimed at making Tata a force in technology manufacturing, and the conglomerate wants to tap the Taiwanese company’s expertise in product development, supply chain and assembly, sources told Bloomberg.

The plan could entail Tata buying equity in Wistron’s India operations, or the companies could build a new assembly plant, one of the people said. They could also execute both those moves, the person added.

Why it matters: If successful, the pact could make Tata the first Indian company to build iPhones, which are currently mainly assembled by Taiwanese manufacturing giants like Wistron and Foxconn Technology Group in China and India.

An Indian company making iPhones would be a massive boost for the country’s effort to challenge China, whose dominance in electronics manufacturing has been jeopardised by rolling covid lockdowns and political tensions with the US.

It could also persuade other global electronics brands to consider assembly in India to reduce their reliance on China at a time of increasing geopolitical risks.

Top themes and highlights of ET Soonicorns Summit

At the ET Soonicorns Summit, an initiative to celebrate the future unicorns of India, top entrepreneurs and startup ecosystem leaders acknowledged the need for new-age companies to focus on corporate governance, value creation, and sustainable growth with a clear path to profitability in order to build resilient, lasting businesses from India.

Around 50 speakers, including the founders and investors of Indian unicorns and soonicorns, came together at the ET Soonicorns Summit, powered by AWS and Intel, for deep-dive deliberations on the growth opportunity for Indian startups and to share valuable lessons on navigating a crisis and building businesses powered by sound fundamentals.

Startups building disruptive tech solutions from India for the world, as well as solving for Bharat and harnessing tech for good are among the top themes that will continue to propel India’s new-age companies to grow at an attractive rate, said speakers at the two-day Summit, which came to a close on Friday.

Startups should play the ‘value creation game,’ rather than the ‘valuation game,’ and chase ‘profit pools’ instead of ‘capital pools’, said entrepreneur and investor Anupam Mittal during his keynote interview on the final day of the event. The unicorn founders of D2C brand Mamaearth, multi-game platform Games24x7, and healthtech startup Pristyn Care also shared key learnings from their journey in a series of unicorn playbook sessions.

To further bolster coverage of the themes and ideas being tracked at the summit, the ET Soonicorns initiative will launch a video series on Future Unicorns and Decacorns of India as well as reports and trackers over the next few months.

Watch the highlights of the ET Soonicorns Summit here. You can also visit the ET Soonicorns Summit website to know more about the initiative.

ETtech Deals Digest

The days of big-ticket funding seem a distant memory at this point, with wary investors walking away from large funding deals at unicorns, citing tech turbulence. It has been months we’ve seen Indian startups bagging deals upwards of $100 million as richly valued startups have struggled to rack up capital. Investors have turned extremely cautious, prizing profitability over growth amid strong macroeconomic headwinds.

The number of funding rounds of $100 million and upwards has fallen from 29 in the first quarter of the calendar year to 18 in the second quarter and just three in the third quarter (as of August 24).

The biggest deal this week was struck by Wow! Momo Foods, which raised $16 million from Oaks Asset Management. Here is a list of all the startups that raised funds this week.

Twitter agreed to pay whistleblower $7 million in June settlement

Twitter agreed in June to pay $7 million to settle a compensation dispute with the whistleblower whose allegations will be part of Elon Musk’s case against the company, Reuters reported on Friday, citing a source.

Catch up quick: Whistleblower Peiter “Mudge” Zatko, who was fired by Twitter in January and was the company’s security head, last month accused the social media firm of falsely claiming it had a solid security plan and making misleading statements about its defences against hackers and spam accounts.

Zatko will meet the US Senate Judiciary committee on September 13 to discuss the allegations.

Zatko’s settlement was first reported by the Wall Street Journal, which said he agreed to a nondisclosure agreement that forbids him from speaking publicly about his time at Twitter or disparaging the company.

Yes, but: Details of Zatko’s settlement will soon be made public in the court filings in Twitter’s legal battle with Musk, who has claimed he can walk away from his $44-billion agreement to buy the social media company.

Today’s ETtech Top 5 newsletter was curated by Zaheer Merchant in Mumbai and Gaurab Dasgupta in New Delhi. Graphics and illustrations by Rahul Awasthi.