Many companies abused BNPL: Upasana Taku, MobiKwik co-founder

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Upasana Taku, chairperson, co-founder, and chief operating officer of MobiKwik

The buy now, pay later (BNPL) short-term financing scheme has been abused by many companies in recent times, said Upasana Taku, co-founder of MobiKwik, a payment service provider, in an exclusive interview with Moneycontrol on December 4.

“BNPL has been abused by many companies. We have even seen companies offering cash loans in the name of BNPL,” said Taku.

BNPL allows consumers to make purchases and pay for them over time, usually with no interest if it’s within a couple of weeks (varies from bank to bank). Beyond that, interest is charged.

Taku explained that the purpose of BNPL was to help expand the purchasing power of consumers by giving small period of credit.

In November 2023, Reserve Bank of India (RBI) Governor Shaktikanta Das had said that financial institutions must control unsecured lending, duly account for risks while pricing loans, and continue to look for signs of stress in their books.

RBI Deputy Governor M Rajeshwar Rao had added that Indian regulators need to continuously work to redefine regulations and the regulatory framework to keep pace with and support innovations in the fintech industry.

Opportunity in tier 2 towns

Taku said there is a big opportunity in digital payments, credit, as well as insurance and mutual funds in tier 2 cities.

“We are working on many insurance and mutual fund products. We are also using AI and machine learning to develop some other financial products,” Taku added.

Earlier in September, Balaji Rajagopalan, Chief Technical Officer at the State Bank of India, had told Moneycontrol that banks and financial institutions must explore the use of artificial intelligence to ease their workload.

Talking about MobiKwik’s margins, Taku said that while the company’s profits will continue to be in single digits this year, they are expecting it to be in double digits by next year.

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