Fintechs, RBI consult over FLDG rules; restaurants explore options as Zomato Gold returns
Following the release of the Reserve Bank of India’s (RBI’s) new digital lending rules, fintechs in India have been in continuous consultation over first loss default guarantee (FLDG) arrangements. Today we have new details of the conversations between the central bank and fintechs on this hot bottom issue. More details in the ETtech Morning Dispatch.

Also in this letter:
■ Zomato Gold returns, NRAI asks restaurants to form loyalty programmes
■ App developers see alternative business models after CCI’s diktat
■ Byju’s testing new business model within K12 – home tuitions

Fintechs ask RBI for clear First Loss Default Guarantee framework


Even as several months have passed since the Reserve Bank of India (RBI) notified the industry of its digital lending rules, several fintechs have continued to hold consultations with the banking regulator asking for clarity on the first loss default guarantee (FLDG) arrangements and rules for unregulated entities.

What’s FLDG? An FLDG is a mechanism through which a third party guarantees to compensate up to a certain percentage of default in a loan portfolio of a regulated entity.

On the wish list: Fintechs are asking for – a detailed framework to allow FLDG arrangements to continue with banks as well as a set of guidelines to better help non-regulated entities understand their scope of operations. While most fintechs are asking for guidelines on FLDG structures to be brought in between regulated entities (RE), some are also batting for allowing this securitisation structure between REs and unregulated fintechs.

But why’s this important? FLDG arrangements made new-age fintech NBFCs with little credit experience a viable proposition for banks and financial lenders, offering even unregulated fintechs (without licenses) to have skin in the game. Further, with regulatory changes creating havoc for fintech business models, these new-age businesses now want to shun uncertainty and want a clear view of operations.

Fintechs seek regulatory clarity from RBI

Yes, but: RBI governor Shaktikanta Das had clarified in September last year that the central bank’s top brass was still deliberating over how to treat rules around FLDG and that a decision would be taken after considering stakeholders’ feedback. The governor highlighted then that “there were a lot of issues that required deeper examination”.

Also read: ETtech Budget Watch: Fintechs seek ‘priority’ tag, sops in 2023 Budget

NRAI tells restaurants to step up loyalty programmes as Zomato Gold returns


As food delivery platform Zomato restarts its loyalty programme Zomato Gold with discounts on deliveries and dining, industry body National Restaurants Association of India (NRAI) is sending advisories to restaurants to step up their own loyalty programmes and discounts through other apps.

What’s the matter? Zomato Gold, first launched in 2017 as a membership programme with offers such as one plus one free at restaurants, had to be withdrawn amid protests from restaurant partners, which alleged that deep discounts offered with Gold were making businesses unsustainable. Gold (which was later renamed Pro) was discontinued in August last year.

What restaurants are saying? Restaurant brands are either negotiating terms with Zomato or have decided against staying under the Gold programme.

“We are still negotiating with them (Zomato Gold) on certain terms. Until that’s not completed, our members will wait for the outcome,” said Kabir Suri, president of NRAI, which has over 500,000 members.

Zomato’s stand: “On loyalty programmes, we are aware of what the competition is doing, and we had one of our own, which we discontinued. It’s a business call. There are pros and cons of the kind of loyalty programme that is out there in the market today,” Zomato’s chief financial officer, Akshat Goyal had said on a previous earnings call.

Byju’s tests at-home one-on-one tuitions for K12

Byjus launching home tution model inn bengaluru

Amid multiple controversies ranging from a delay in reporting financials, unpaid loans, governance, and layoffs, Byju’s has been testing out a new business model within K12 – home tuitions.

Numbers so far: Started as a pilot programme in August 2022, Byju’s has now hosted around 650 demo classes, and has about 100 teachers under this service, according to sources aware of the matter. Byju’s Home Tuitions is available across all city pin codes.

The hourly demo class is priced at Rs 500, which gets adjusted with the monthly fee of about Rs 6,000, without discount, for five days a week hourly class – for a fifth-standard student studying under CBSE.

Teething troubles: The home tutoring space is extremely fragmented in India. A top challenge for Byju’s in trying to scale home tuitions includes disintermediation, wherein tutors undercut Byju’s pricing by teaching the existing students directly and going independent.

Quote, unquote: “What Byju’s is doing is a logistics play. I have a steady supply of teachers and I have a big market where tuition is needed and they are trying to address this via at-home teaching solutions,” Narayanan Ramaswamy, national leader of education and skill development practice at KPMG India told ET.

Google-CCI case: App developers see scope for alternative business models

Google CCI

Following the Competition Commission of India’s (CCI’s) diktat asking Google to unbundle its controlled app ecosystem in India, local app developers believe the move will help them create several new business models for engaging with users through partnerships with hardware firms and operating systems.

What are the changes? Last week, Google announced several changes to the way it operates Android and Google Play billing in India.

The changes will allow original equipment manufacturers (OEMs) to license individual Google apps for pre-installation on their devices. Also, Indian users will have the option to choose their default search engine. Google is also updating its backend to allow partners to build non-compatible or forked variants of Android.

New possibilities: Rohan Verma, chief executive & executive director of MapmyIndia believes the possibilities are endless and it could even mirror China’s ecosystem wherein multiple OS options and app stores thrive.

“It will level the playing field and I feel this fragmentation will only help the ecosystem and provide users with the freedom of choice while challenging the monopoly that Google has built for itself,” Verma told us.

Tech Mahindra’s net profit falls 5% YoY to Rs 1,297 crore but beats estimates


Tech Mahindra’s consolidated net profit for the quarter that ended December declined 5.3% year-on-year (YoY) to Rs 1,297 crore. Revenue from operations increased 20% YoY to Rs 13,735 crore.

By the numbers: Revenue from operations increased 20% YoY to Rs 13,735 crore. Operating profit, calculated as earnings before interest, taxes, depreciation, and amortisation (Ebitda), rose 8% sequentially and 4% YoY to Rs 2,144 crore, the company said.

The net new deal wins for the quarter was at $795 million, higher than $716 million in the previous quarter, and $704 million during the same quarter a year ago.

Similar to other IT services firms, Tech Mahindra, too, saw a sharp moderation in attrition. Its last twelve months (LTM) attrition rate dropped to 17% in the quarter under review from 20% in the previous quarter.

Management speak: “The YoY profit decline is due to the supply side pressures. The increases in wages and backfilling costs over the past four quarters had an impact. The accounting impact from acquisitions also weighed in. We will continue to expand sequentially every quarter,” said Rohit Anand, chief financial officer, of Tech Mahindra

After tech giants, ChatGPT now wows tech C-suites


Excited by the discovery of OpenAI’s bot ChatGPT in December, TCS chief financial officer Samir Seksaria couldn’t wait to share the news with his children. But, to his amazement, his younger child said, “I did my history homework taking help from that!”

Seksaria is not the only world among tech CXOs to be wowed by the chatbot.

Wowing CXOs: The chatbot with an answer to every question has crawled its way into the professional and personal lives of India Inc’s top executives.

“Several years ago, Infosys had supported this initiative in a very small way through a donation. We see the progress they have made is huge,” said Salil Parekh, managing director, and chief executive of Infosys. “We have examples where we are using ChatGPT in client situations, which is starting to further increase productivity and automation.”

Tough fight for Google: The technology in which Microsoft has invested $10 billion is expected to give a tough fight to Google’s search dominance and disrupt several established technology businesses.

“From a programming perspective, if I request a small program like ‘say hello world’, it will definitely give me the code. It can also identify mistakes in a code. But I don’t think it can put complex algorithms for enterprises right now,” said TCS’s Seksaria,

Also read: As ChatGPT makes waves, read what its rivals are upto

Other Top Stories by Our Reporters

Data localisation

Global providers seen safer to store data locally, says Cisco study: Around 88% of respondents in India believe their data would be inherently safer if it could be stored locally, but 90% said they would prefer a global provider to store the data, revealed the findings of NASDAQ-listed Cisco’s 2023 Data Privacy Benchmark Study, released on Monday.

AWS launches Data Labs in India, and releases data maturity report: Large organisations in India could grow their annual business revenue by 13.6% or about Rs 745 crore if they can harness the power of data, as per a study by Amazon Web Services (AWS). The Demystifying Data 2022 report, commissioned by AWS and prepared by Deloitte Access Economics, surveyed 521 senior business decision-makers in Indian organisations.

Global picks we are reading

Nigerian artist uses AI to re-imagine life for the elderly (Reuters)

When Your Dog Eats Your Apple AirTag (WSJ)

How Messi fans organized to break an Instagram world record (Rest of World)

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