Indian pay-later cards startup Uni plans to temporarily suspend its card services in the South Asian market following the local central bank’s guidelines on digital lending, it said in a notice to users seen by TechCrunch, in a move that will impact millions of users.
“This means your card will be inactive for now. We are working with our banking partners to resume the card services as soon as possible and will keep you posted. However, there will be no change to your billing and repayments,” wrote the startup, which is valued at $350 million, in the notice.
Uni, which is backed by General Catalyst, Elevation Capital and Lightspeed Venture Partners, confirmed in a statement to TechCrunch that it plans to suspend card services on its products (Uni Pay 1/3rd Card and the Uni Pay 1/2 Card) and expects to roll out the change to the entire customer base by Monday.
“While it is a decision taken with a heavy heart, we are always committed to being compliant and want to be on the right side of the regulations,” the startup said in a statement.
India’s central bank is inching closer to tightening its lending guidelines, dictating who all can lend to customers in India. Another fintech entrepreneur, who isn’t affiliated with Uni and requested anonymity, said the lack of clarity from the Reserve Bank of India is severely impacting many good startups and ultimately affecting the lives of many customers.
The move follows SBM Bank India, which partners with several Indian fintechs to launch co-branded cards, informing Uni and a number of other startups earlier this month to halt onboarding new customers, Indian news outlet MoneyControl reported.
“Due to the latest RBI guidelines on digital lending, we are proactively suspending our card services in phases by Monday. Bearing the fact in mind that the Uni Card is used for urgent needs like fee payments, medical bills and emergencies, we have ensured that every one of our customers will have access to their credit line through Uni Cash,” said fintech veteran Nitin Gupta, who co-founded Uni and serves as its chief executive, in a statement Friday.
“With a free partial limit enabled, our customers will not face any disruptions while using their funds. We are building something really exciting. Like always, it’s first-of-a-kind and never been done before,” he added.