PB Fintech is Set to Create a Payment Aggregator Division and Will Apply for RBI Authorization

PB Fintech is a firm specializing in delivering financial technology solutions to both businesses and individuals. Our services encompass payments processing, online banking, lending, and investment management. Our primary goal is to enhance accessibility, security, and user-friendliness of financial services through technological innovation. Headquartered in New York City, PB Fintech operates both domestically and internationally.

Related: Fintech Startup Juspay Revenue Exceeds INR 200 Cr

Policybazaar’s parent company PB Fintech announced on Wednesday (March 20) its plans to establish a new wholly-owned subsidiary in order to venture into the payment aggregation business. In a regulatory filing with the stock exchanges, the company stated that the new entity, named PB Pay, will be responsible for conducting payment aggregation activities. PB Fintech also mentioned that once incorporated, PB Pay will apply for a payment aggregator license with the Reserve Bank of India (RBI).

“…we’d like to inform you that the Board of Directors has recently given their nod to establish a new fully-owned subsidiary of the Company. This new venture will go by the name ‘PB Pay Private Limited’ and will specialize in facilitating payment services, both domestically and internationally, subject to approval from the Reserve Bank of India. The subsidiary aims to assist merchants by providing them with the necessary infrastructure for accepting payments, both offline and digitally.

In accordance with this decision, the proposed authorized share capital for the subsidiary is set at INR 50 Cr, with a proposed paid-up share capital of INR 27 Cr. This move signifies our commitment to expanding our services and ensuring smoother payment experiences for our customers.”

It is important to mention that the payment aggregator framework was initially introduced by the central bank in March 2020. The license is required for acquiring merchants and providing digital payment acceptance solutions.

Besides adhering to a plethora of regulatory and statutory obligations, aspiring companies vying for a payment aggregator license must also meet the minimum net worth requirement. PB Fintech’s decision coincides with the Reserve Bank of India’s heightened scrutiny on payment aggregators and its amplified compliance demands for issuing such licenses.

Last September, the central bank swiftly declined the payment aggregator license applications of 72 startups, including those already holding licenses. RBI’s past concerns have varied from not meeting the net worth criteria to lapses in conducting system and cybersecurity audits.

Nevertheless, the central bank has recently issued licenses to several entities. In the earlier part of this month, the RBI granted payment aggregator licenses to Infibeam Avenues and Amazon Pay. Prior to this, approval was also given to MSwipe, Zoho, Juspay, Decentro, and other companies.

PB Fintech’s decision to establish a payment aggregator subsidiary coincides with the company’s recent success, marked by its first profitable quarter. In Q3 FY24, the company saw a significant turnaround, reporting a profit after tax (PAT) of INR 37.2 Cr compared to a loss of INR 87.6 Cr in the same quarter of FY23. Operating revenue also experienced a noteworthy 43% year-on-year increase, reaching INR 871 Cr in Q3 FY24.

PB Fintech, the parent company of Policybazaar, unveiled plans to establish PB Pay Private Limited for payment aggregation services, a move synced with the Reserve Bank of India’s stringent payment aggregator licensing framework. The subsidiary’s proposed authorized share capital is set at INR 50 Cr. The central bank’s intensified scrutiny on payment aggregators coincides with its recent granting of licenses to entities such as Infibeam Avenues and Amazon Pay. Notably, PB Fintech’s strategic decision aligns with its notable financial performance in Q3 FY24, marking a first profitable quarter and substantial revenue growth of 43% year-on-year.