RBI Rejects Cred's Bid To Raise Stake In NBFC NewTap: Report Shah and Cred have collectively invested about INR 79 crore in equity capital in Newtap, as per the report
By Teena Jose
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The Reserve Bank of India (RBI) has rejected Kunal Shah-owned Cred's application to increase its stake in its non-banking finance (NBFC) firm—Newtap Finance, according to a Livemint report.
"Cred applied to take control of the NBFC. But last month, the application got rejected on the grounds of 'corporate governance and management issues'," the source quoted in the Livemint report said, adding that Cred is engaged in discussions with the banking regulator to determine the reason.
Cred has been looking to raise about $50-60 million, as reported by The Arc, for the NBFC firm from both new and existing investors including Sequoia Capital and Singapore's sovereign fund GIC, to maintain equity-to-debt ratio and serve diverse customers.
At present, Newtap powers Cred's buy now-pay later product (Cred Flash), and personal loans (Cred Cash), which includes some other lending partners as well.
Founded in 2021 by Shah, Newtap Finance, had acquired Parfait Finance & Investment, which is a Reserve Bank of India (RBI)-registered NBFC, to offer lending products to Cred users.
While the offering remained restricted to Cred's user base, the NBFC is now looking to expand its lending scope to other businesses, and raise independent funding, both debt and equity, as per available reports.
Shah and Cred have collectively invested about INR 79 crore in equity capital in Newtap, the report stated.
