Groww Receives RBI’s Green Light as Payment Aggregator

Groww - Startup Article

Three points you will get to know in this article:

  • RBI approves Groww Pay Services as payment aggregator.
  • The startup got approval for its PA license in January.
  • Groww Pay joins Amazon Pay, JusPay, Stripe, Tata Payments, and Mswipe in getting their PA licenses this year.

Groww's Evolution into a Comprehensive Financial Institution

Adding to the growing array of online payment facilitators, the Reserve Bank of India (RBI) has granted approval to Groww Pay Services, a fintech unicorn’s bill payment platform, to function as a payment aggregator (PA). Earlier this year, in January, the startup obtained provisional authorization from the central bank for its PA operations. The acquisition of the PA license marks a significant milestone, aligning with Groww’s vision to evolve into a comprehensive financial institution, offering a wide array of services.

According to an insider, “Upon receiving the final nod from the RBI, we’ll explore opportunities to address market needs with our innovative solutions.” This license empowers the startup to onboard merchants and provide seamless digital payment acceptance services. Introduced by the central bank in March 2020, the PA framework lays the foundation for such advancements.

In 2017, Harsh Jain, Lalit Keshre, Neeraj Singh, and Ishan Bansal came together to establish Groww. Originally conceived as an investment technology platform, Groww empowered users to delve into stocks, exchange-traded funds (ETFs), and IPOs. Over time, the startup has consistently broadened its array of services. Just last year, Groww proudly announced the finalization of its acquisition of Indiabulls Housing Finance’s mutual fund division for INR 175.6 Cr, signaling its entry into the mutual fund domain.

Groww's Technological Advancements in Payment Services

Last week, the startup received approval from the Securities and Exchange Board of India (SEBI) to launch India’s inaugural Nifty non-cyclical consumer index fund. The new fund offering (NFO) from the platform’s Asset Management Company (AMC), Groww Mutual Fund, is anticipated to be available starting in the first week of May. Prior to this, in July 2023, Grow introduced a Unified Payments Interface (UPI) payment feature on their app. This continual expansion demonstrates the platform’s commitment to providing innovative financial solutions for its users.

Shortly after obtaining a third-party application provider (TPAP) license for Groww Pay from the National Payments Corporation of India (NPCI), this feature was launched. Yes Bank serves as its payment service provider (PSP) bank, and the app primarily concentrates on facilitating bill payments such as electricity, water bills, loans, and credit card repayments.

In addition to these services, lending was incorporated into its offerings after acquiring an NBFC license through Groww Creditserv Technologies towards the end of 2022.

Financial Success and Milestones of Billionbrains Garage Private Limited

Meanwhile, amidst these developments, the parent company of Groww, Billionbrains Garage Private Limited, achieved profitability in the financial year 2022-23 (FY23). It recorded a net profit of INR 448.7 Cr in FY23, a significant turnaround from the net loss of INR 239 Cr in the preceding fiscal year. Operating revenue witnessed a remarkable surge, soaring to INR 1,277.8 Cr from INR 351 Cr in the previous fiscal year. In contrast, the RBI has been actively expanding its list of authorized payment aggregator (PA) license holders this year.

Regulatory Developments in the Payment Aggregator Landscape

Just last month, Innoviti, a provider of digital payment solutions, along with Concerto Software and Systems, secured their PA licenses. They now stand alongside big names like Amazon Pay, JusPay, Stripe, Tata Payments, and Mswipe, all of whom have also obtained their PA licenses this year. Meanwhile, notable players like Cred under Kunal Shah’s leadership, PayU, and Khatabook, among others, have received preliminary approval from the central bank to operate as payment aggregators.

Groww Pay Services’ recent approval as a payment aggregator (PA) by the Reserve Bank of India represents a pivotal step in the company’s progression towards becoming a comprehensive financial institution. This move aligns with Groww’s strategic vision of diversifying its financial services beyond its initial investment technology platform. Moreover, significant milestones such as the acquisition of Indiabulls Housing Finance’s mutual fund division and the approval for launching the Nifty non-cyclical consumer index fund underscore Groww’s commitment to expanding its service offerings. Additionally, the success and profitability of Groww’s parent company, Billionbrains Garage Private Limited, further emphasize the company’s strong financial growth. Lastly, the actively evolving regulatory landscape in India’s payment aggregator sector, with new entrants securing PA licenses, reflects the dynamic nature of the industry.

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