Slice shifts to term loans from credit line post RBI note

By Team Startupcity  |  Wednesday, 20 July 2022, 09:00 IST

Slice shifts to term loans from credit line post RBI note
Card-based fintech startup Slice will offer real-time term loans to customers for each transaction, based on user profile, nature of transaction and merchants.
This is a departure from issuing a revolving credit line to consumers and comes after the Reserve Bank of India (RBI) recently barred fintech firms from loading credit lines onto wallets and prepaid payment instruments.
The credit card challenger unicorn told consumers about the changes in its credit model through a note on Tuesday.
Slice said it will offer a real-time term loan for card customers for every transaction, instead of a revolving credit line.
The fintech player is calling the new model ‘Purchase Power’, according to the consumer communication.
“Purchase Power is an estimated amount you may qualify to borrow from Slice,” the company told users, adding that the real-time risk underwriting will be backed by its data and tech infrastructure to provide the best possible credit to users at the time of the transaction.
According to the communication, “every time you transact with your Slice card, a new approval decision will be made instantly to assess the best amount you can borrow for the purchase. The decision will be determined primarily based on merchant credibility, risk, fraud checks, and your past payments as well as repayment patterns.”
Slice also reassured customers that the change in its credit model will not negatively impact their credit scores, as it will continue to follow the credit bureau reporting process.
While the change may trigger uncertainty over whether a user will get the loan at the point-of-sale, customers can check their spending power on the app to get an indication of their spending power.
Slice has been giving several credit features to its prepaid card users including its ‘Pay-in -3’ offering, no-interest equated monthly instalments (EMI), among others. However, with the change in credit model, all loans given to card customers will now be a term loan moving forward, processed in real time.
As per a earlier report, Slice’s ongoing fundraising had been halted following RBI’s order, due to lack of regulatory clarity in the sector.
Of the ongoing fundraise, Slice had already raised $50 million last month led by Tiger Global. It was looking to add at least another $50 million to its latest round and was in talks with new and existing investors.
The Bengaluru-based firm entered India’s long list of unicorns, or startups with a valuation of $1 billion or more, in November last year, after it picked up $220 million in a round led by Tiger Global and Insight Partners. It was valued at around $1.5 billion after the $50 million funding in June.
After the RBI circular, several fintech firms including LazyPay have also updated their terms and conditions to reflect compliance.
“The terms and conditions (T&C) are being altered on two counts, at present. If someone was a non-bank PPI, then they are stating in their T&C that the money will not be disbursed in the consumer’s wallet, but in their bank account (as cash) instead. Second, is that the whole overdraft should be seen as a term loan arrangement and not a revolving credit line,” said the founder of a fintech firm who did not want to be named.

CURRENT ISSUE

BEST STARTUPS TO WORK FOR

siliconindia