Xiaomi and OPPO, which have more than 100 m, smartphone users in India, have been waiting for approval by the rbi for a year, reuters reported, but the recent release of new foreign direct investment rules has added another layer of content to the approval process, raising doubts about the future of the scheme.
Since the two companies cannot lend directly to consumers without a shadow banking licence, they are now using a partnership with Indian finance companies to provide borrowing services on their platforms.
Xiaomi launched MiCredit, an online lending service, in India in December, allowing users to obtain micro-loans through Anindian lenders. By the end of 2019, its platform had issued loans worth $16.5 million.
OPPO introduced a similar financial service, Oppo KASh, in March.
However, people familiar with the matter said the two Chinese mobile phone brands were keen to set up their own non-bank financial firms in India, helping to boost margins by allowing them to sell financial products directly to smartphone users.
Recently, however, India’s new foreign direct investment (FDI) rules have added another layer to the approval process. The approval process, which has become cumbersome and lacking transparency, goes one step further.
In April, the Indian government said it would monitor foreign direct investment from companies in neighbouring countries. The move is widely seen as an attempt to prevent Chinese companies from taking stakes in troubled local companies during the crisis of the new coronavirus. China responded by calling the rules “discriminatory.”
For Xiaomi and OPPO, sources say the two companies have been waiting for about a year to secure the RBI’s NBFC approval. More worryingly, India’s smartphone shipments are likely to fall by 10 per cent this year as a result of a slowdown caused by the new coronavirus.