Walmart-backed Flipkart gets RBI nod to lend with new license
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Walmart (NASDAQ: WMT)-backed Flipkart has obtained a lending license from the Reserve Bank of India (RBI), enabling it to provide loans directly to consumers and sellers on its platform. This development makes Flipkart the first major e-commerce company in India to receive a non-banking financial company (NBFC) license, representing a notable advancement in the country's financial services landscape.
According to a Reuters report, this is also the first time India's central bank has issued a NBFC license to a major e-commerce firm, permitting it to extend credit but not accept deposits.
While most e-commerce companies in India currently partner with banks or NBFCs to offer financing, this license allows Flipkart to provide loans independently, creating a more profitable lending model for the company.
Flipkart, majority-owned by U.S. retail giant Walmart with an over 80% stake, submitted its application for the lending license in 2022, the report said. In 2024, the company was valued at $37 billion during a $1 billion funding round led by Walmart. As part of its strategic realignment, Flipkart is relocating its parent company from Singapore to India. Walmart also has plans to eventually list the 17-year-old e-commerce firm on the stock market. Walmart's 2018 acquisition of Flipkart also included ownership of fintech company PhonePe, which is similarly preparing for an initial public offering (IPO).
Flipkart is expected to begin its lending operations within the next few months. However, the official launch will depend on the completion of several internal steps, including the appointment of key executives, the formation of its board, and the finalization of its business strategy. The company intends to extend credit directly to consumers through its well-known e-commerce platform and fintech app, super.money. Additionally, it may provide financing options to sellers using its marketplace.
Amazon enters financial services with Axio acquisition
At the same time, Flipkart's competitor Amazon (NASDAQ: AMZN) has expanded its presence in financial services by acquiring a non-banking lender, Axio. The Indian startup, in which Amazon has held a stake for the past six years, announced in a blog post that the acquisition agreement was finalized in December following the completion of due diligence. This move reinforces Amazon's growing focus on financial offerings in one of its fastest-expanding markets.
'In December, after successful completion of due diligence, we signed an agreement with Amazon for a proposed acquisition of Axio. The transaction will now await the required regulatory approvals,' the company said. 'The proposed acquisition aims to build on a successful six-year business and equity partnership centered around delivering accessible and affordable credit to customers across the country… Amazon has been an invaluable partner in this journey, and we have more to accomplish together… This means reaching more under-served customers, diversifying our offerings to address more unmet needs, and continuing to strike the right balance of customer experience, risk management, and affordability as we strive to responsibly expand access to credit across the country,' it added.
E-commerce market in India to touch $550 billion by 2035
India's e-commerce industry has been expanding rapidly, with its market value reaching approximately $125 billion in 2024. Projections suggest that this figure could rise to $550 billion by 2035, according to Statista.
The sector is highly competitive, with numerous domestic and international players vying for dominance. Walmart's Flipkart and Jeff Bezos-led Amazon continue to lead the space as top e-commerce platforms in the country. Among Indian consumers, electronics and clothing remain the most commonly purchased product categories.
Several factors have fueled the industry's rapid growth, including the increasing digitization of the economy and widespread access to affordable Internet services. In 2024 alone, online sales in India were projected to grow by over 19%. As a result, the revenue potential of the sector has risen significantly, with average retail e-commerce revenue per user surpassing $85.
However, data privacy issues and increasing online fraud have turned out to be the most significant hurdle in the growth of e-commerce in India.
Data from the RBI's annual report show that digital payment fraud in India jumped to a record $175 million in the fiscal year that ended in March 2024 (FY2023-24). As a result, the RBI has constituted a committee to examine various aspects of setting up a 'Digital Payments Intelligence Platform' to ensure safety and security against fraud.
Watch: India is going to be the frontrunner in digitalization
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