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How fintech startup Slice is working around RBI’s new norms on credit lines

Fintech start-up Slice will now offer its customers real-time term loans on each transaction rather than a revolving credit line

What's the news? Fintech start-up Slice will now offer its customers term loans on each transaction rather than a revolving credit line, the company said in an email sent to customers. While the email does not specify the reason behind this move, it is in all likelihood due to the Reserve Bank of India's (RBI) new guidelines, which bar prepaid payment instruments (PPIs) like wallets and prepaid cards, such as the one offered by Slice, from offering customers a credit line. Why does this matter? The RBI norms issued in June disrupted many fintech startups, especially in the “buy now pay later” segment, because the business models of many of these companies involved issuing revolving credit to customers to refill their prepaid cards or wallets. Slice's pivot might be something the rest of the industry follows as they figure out ways to comply with the norms and await further clarity from RBI. How will Slice's new business model work? Slice is calling its new credit feature "Purchasing Power," which is an estimated amount a user may qualify to borrow from Slice for each transaction. "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 explained in its email to customers. Previously, Slice used to offer customers a credit line and no-interest EMI split over three months on that credit. Will…

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