The central bank of India has rejected the application of Chaitanya India Financial Credit, which was seeking permission to become a bank.
The Reserve Bank of India rejected four applications on Tuesday, including the one by Bansal's Chaitanya, saying they were not suitable for running banks in the world.
Tuesday's decision is a big blow to Bansal, who has been trying to get a banking license for years. A license would have allowed the firm to offer additional products and improve its financials.
A banking license in India would have allowed the company to accept deposits and lend them to other people. Firms have to look at other banks and funding sources where it costs them more interest to borrow money. A license would have allowed the company to launch its own credit cards and settle international transactions.
The central bank's decision and options will be analyzed by Navi, who was at a separate presser. In the same year, he left the e-commerce giant and founded a new one. He has marketed his company as a financial company that understands tech.
We will ask the reason behind the decision. He said that the decision was not the end of the road for the startup and that there could be an appeal against it.
The company applied for a banking license in early 2020. The startup tried to put together a funding round at over $4 billion, but talks fell after it couldn't get a license.
According to local media reports, the firm has violated foreign exchange rules, has not handled customers well, and has struggled to maintain proper governance.
The Repatriates Cooperative Finance and Development Bank, and a proposal by Pankaj Vaish are the other firms that did not make the cut for universal bank license. The Reserve Bank of India has been very conservative with issuing banking licenses. Bandhan and IDFC First are two firms that have existed in the past 10 years.
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