Xiaomi plans to launch its financial services unit as NBFC
The company will offer consumer loans to people who buy electronics, home appliances, etc.
It will also provide credit to businesses for the purchase of goods, merchandise, etc.
China-based electronics company Xiaomi, which is already popular in India as a major smartphone brand, is now looking to enter the consumer credit and B2B lending space in the country. Xiaomi plans to launch a non-bank finance company (NBFC) in India.
According to a RoC file from the company, its new branch, Xiaomi Financial Services India, is considering obtaining approval from the Reserve Bank of India to operate as an NBFC in the country.
Xiaomi Financial Services will provide consumer loans to individuals for the purchase of electronics, home appliances, lifestyle products, vehicles, furniture, among others.
It will also provide credit to businesses, enterprises and any other entity to purchase and acquire goods, commodities and other assets.
This development comes shortly after the fintech of the South African conglomerate Nasper PayU received RBI approval to operate its own NBFC in September.
This is not Xiaomi’s first attempt to enter the financial services industry in the country. Earlier this year, in May, Xiaomi had launched Mi Credit in partnership with the KrazyBee lending platform which offers quick loans to users, from $ 14.66 (1000 INR) up to $ 1466.11 (1 lakh INR). According to the company, users can apply for loans in under 10 minutes with a simple KYC verification through Mi Credit.
According to a HEY report who cited two anonymous sources, Xiaomi would aim to create a leading position for its financial services arm in the FinTech segment and in the long term plans to apply for a banking license after complying with all the rules prescribed by the RBI.
Xiaomi’s growth in India:
- Xiaomi was launched in 2010 and started operations in India in 2014
- In August, Xiaomi had announcement that it recorded $ 2.37 billion (16.4 billion yuan) in the second quarter of 2018
- Xiaomi is the number one smartphone brand in India according to to T2 data from International Data Corporation
- Xiaomi claimed the first place among smartphone companies in terms of units shipped with a 29.7% market share in the second quarter of 2018
- in May, the company announced that the The Indian market contributed 32% of its total global revenue of $ 18 billion in 2017
A report from November 2017 from the research organization CRISIL suggested that the NBFC landscape in India is expected to experience a CAGR of 18% and increase its share of total credit to 19% by 2020.
Lately, many large companies from different industries have tried their luck in fintech by launching NBFCs and lending platforms. The two main factors facilitating this growth are the deep penetration and reach of NBFCs in the consumer segment and their technology-driven credit scoring methodologies.
The digital payments giant Paytm is as part of the research process RBI approval to operate a peer-to-peer (P2P) lending platform in the country. Interestingly, e-commerce giant Flipkart is also considering the fintech space and has reportedly applied for an NBFC license for offer consumer loans on its platform.
Some of the others Major the players dominating the NBFC space are Finance Corporation, Transport Finance Company, Bajaj Finance, Mahindra & Mahindra Financial Services, Muthoot Finance, among others.
The decision of the smartphone giant Xiaomi to enter this segment in India with its financial services Xiaomi aims to expand its services and hopes to strengthen its position in the country.