Now, P2P lending players under RBI lens; BigBasket, Town Essentials tussle is back

By Daisy On Jun 6, 2023

The emerging peer-to-peer (P2P) lending industry is the latest to attract the attention of the Reserve Bank of India (RBI). This and more in today’s ETtech Morning Dispatch.

Also in this letter:
■ Byju’s weighs Aakash IPO in mid-2024
■ ONDC launches B2B ecommerce, SignCatch, Rapidor join network
■ Gaming startups team up for two regulatory bodies

After online payments, digital loans, now P2P lending under RBI lens

Cred is set to enable peer to peer lending

Hi, this is Pratik Bhakta in Bengaluru. Multiple sources told me that the fledgling peer-to-peer (P2P) lending industry has been receiving detailed queries from the Reserve Bank of India (RBI) on the nature of their partnership businesses.

Driving the news: Multiple P2P players stitched up partnerships with fintechs and consumer-facing applications to source customers for both loans and investments. Some of these partnerships were structured in a way that it stretched regulatory boundaries (details in the story). It turns out that the RBI is now trying to understand how these partnerships are working.

So, what’s next? The expectation is that the regulator might come out with clear instructions around what is allowed and what is not, like what we saw with Slice, Uni and the likes around credit on prepaid cards.

The big picture: The RBI has been clamping down on fintech players by bringing them within regulatory control. We saw that happen with payments players like Cashfree and Razorpay. Then the digital lending sector faced the heat from the regulator. However, unlike the other spaces, the P2P lending industry never really scaled up. So, given the workload on the banking regulator, it never received priority treatment from them.

HC orders trial in BigBasket, Town Essentials tussle

Starting June 12, a trial court in Bengaluru will commence hearings into a three-year-old dispute between Tata Group-owned online grocery platform BigBasket and Bengaluru-based company Town Essentials. The matter pertains to BigBasket’s 2020 acquisition of micro-delivery platform DailyNinja, which had a supply and procurement contract with Town Essentials.

What’s the dispute? In its suit, Town Essentials alleged that BigBasket migrated the customers of DailyNinja to BBdaily without keeping Town Essentials in the loop, because of which major losses were incurred by the business-to-business (B2B) procurement partner. A Bengaluru commercial court ordered parties to go into arbitration to settle the matter.

The appeal: Town Essentials then challenged the commercial court order in the Karnataka High Court. The HC held that while BigBasket and its directors couldn’t be subjected to arbitration given they are non-signatories to the agreement between Town Essentials and Daily Ninja, the case could not be bifurcated into two parts, and ordered the parties to appear before the trial court on June 12.

Tell me more: In its plaint, Town Essentials has sought a temporary injunction, restraining BigBasket to carry on any micro-delivery business, as well as procuring all supplies from Town Essentials, until the final disposal of the suit. In addition, the company has sought damages of over Rs 36 crore from the defendants.

Quick catch-up: The Tata group in May 2021 announced the completion of 64.3% stake in BigBasket after Town Essentials had taken the matter up with the online grocer. Earlier in December 2022, the e-grocer raised $200 million in fresh funding from majority owner Tata Digital, along with other investors. The round pegged BigBasket’s valuation at roughly $3.2 billion.

Gaming startups team up for two regulatory bodies

gaming industry fails to form a self regulatory organisation

Gaming startups and companies have come together to propose at least two self-regulatory bodies (SRB), the details of which will be submitted to the Centre by the end of this week, sources in the know told ET.

Driving the news: One SRB is being proposed by All India Gaming Federation (AIGF) members, while the other SRB is likely to be jointly formed by companies which are members of the e-gaming federation (EGF) and the Federation of Indian Fantasy Sports, sources said. However, the final decision on the number of the SRBs and the board of directors lies with the Ministry of Electronics and Information Technology.

Quick catch-up: ET had reported last month that major online gaming companies such as Dream11, Games24x7 and Mobile Premier League (MPL) were not in support of a self-regulatory organisation backed by industry body Internet and Mobile Association of India (IAMAI).

MeitY in April notified the final rules for online gaming. As per the final rules, the government will appoint multiple self regulatory bodies comprising industry representatives, educationists, and other experts such as child experts, psychology experts, etc.

Byju’s weighs launch of Aakash IPO in mid-2024

Beleaguered edtech startup Byju’s plans to launch the initial public offering (IPO) of its test-prep subsidiary Aakash Education Services in mid-2024. In a statement on Monday, the company said its board had cleared the IPO proposal. This comes at a time when the edtech startup is struggling to repay its $1.2 billion loan.

Driving the news: The company said the appointment of the merchant bankers for the IPO will be announced soon. “The upcoming IPO will provide a significant capital infusion to bolster Aakash’s infrastructure, broaden its reach, and extend high-quality test-prep education to a larger number of students across the nation,” it said.

IPO prep: ET had reported on May 13 that Byju’s has closed a Rs 2,000-crore round from Davidson Kempner Capital in a structured credit transaction against the cash flows of Aakash Educational Services, linked to the test-prep arm’s public listing.

ET Ecommerce Index

We’ve launched three indices – ET Ecommerce, ET Ecommerce Profitable, and ET Ecommerce Non-Profitable – to track the performance of recently listed tech firms. Here’s how they’ve fared so far.

ONDC launches B2B ecommerce, SignCatch and Rapidor join network

The government-backed Open Network for Digital Commerce (ONDC) has launched business-to-business (B2B) ecommerce on the network with startups SignCatch and Rapidor enabling the buyer side and seller side platforms, respectively.

Tell me more: While SignCatch licences its platform-as-a-service (PaaS) solutions to brands, distributors, and retailers, Kochi-based Rapidor is a platform that enables B2B trade and transactions in closed-loop networks. The two had executed their first B2B transaction on the network last month within a closed group of network players in Bengaluru.

Competition: This foray means ONDC will offer services that compete with B2B players such as Udaan, Amazon Business, IndiaMart, Dealshare, Jumbotail and others. It has enabled features such as dynamic pricing, bulk order purchasing, delivery scheduling, and embedded finance in the form of B2B credit on its new offering.

Catch up quick: The network’s entry into B2B ecommerce has come at a time when its B2C transactions are dwindling in the backdrop of ONDC restricting its terms for incentives to network partners for funding discounts to users.