In order to provide funding options for cleantech companies, fintech company TapFin has launched a new NBFC subsidiary, GoGreen Capital. According to a statement from the fintech startup, the NBFC will provide tailored finance options for sustainability-driven projects to startups, small enterprises, original equipment manufacturers (OEMs), engineering, procurement, and construction (EPC) firms, and others. GoGreen Capital will initially concentrate on serving borrowers in the solar, battery circulatory, and clean mobility industries. According to a release from TapFin, “GoGreen Capital will offer leasing solutions, business loans, and commercial asset loans that are specific to the clean mobility, battery, and solar ecosystems.” TapFin, a fintech startup founded in 2023 by Aditya Singh, Pramod Marar, and Terniza Berry, provides business loans, supply chain financing, insurance, and other services for the cleantech industry. Speaking to a media outlet, Marar said that the company requested an NBFC licence after obtaining a $4 million seed round from Elevar Equity the previous year. The company eventually received the NBFC licence. In the past few months, the brand has been working to establish the budget, systems, personnel, policies, procedures, and, of course, money.
How NBF will Benefit TapFin?
To provide loans to borrowers, the NBFC will make use of TapFin’s data-driven underwriting and contextual credit evaluations. These evaluations are founded on non-traditional insights, including battery analytics, fleet operations, ecosystem alliances, and vehicle usage patterns. With the establishment of the NBFC, TapFin will be able to lend money from its own books, build an asset base, and lessen its reliance on outside platforms. In order to reach tier-II and tier-III cities, GoGreen Capital is also seeking to partner with financial institutions to broaden its green financing options, including co-lending opportunities. In addition, the startup announced that GoGreen Capital will leverage ‘TapFin Hub’, which is TapFin’s proprietary platform. This platform’s core capabilities include OEM and supplier whitelisting, real-time asset management and monitoring through advanced AI models, portfolio valuation, and disposal monetisation. Together, these features will enable GoGreen Capital to achieve a more innovative and expedited go-to-market.
India’s Fintech Startup Witnessing Decline in Funding
Fintech funding has decreased in the first quarter of 2025 due to macroeconomic difficulties and geopolitical headwinds (January-March). A total of $366 million was raised in the first quarter of 2025, which is 35% less than the $571 million raised in the same quarter the previous year. According to market research platform Tracxn, the fintech industry raised a comparable amount of money ($365 million) in Q4 2024. Early-stage funding decreased by 41% from $157 million raised in Q4 2024 to $92.6 million in the March quarter, a 56% fall from $210 million in Q1 2024. $45.9 million was raised for seed-stage finance, which is 39% less than the $75.5 million raised in Q1 2024 and 16% less than the $54.6 million raised in the preceding quarter.
Diwali festivities seem to have started a wee bit early within the fintech ecosystem. Spirits are high after the tough taskmaster and India’s banking regulator Reserve Bank of India gave a no-objection certificate to what is being touted as a rare merger.
Digital payments app company–Slice Pay–merging with the lesser-known Guwahati-based North East Small Finance Bank has certainly piqued the interest of stakeholders. This move effectively gives Slice the power to raise deposits, and lend and offer their own unique products to customers of NESFB.
Slice began operations in 2016 and was essentially a prepaid card with a credit line. According to data tracking platform Tracxn, the Bengaluru-based unicorn fintech company was valued at $1.8 billion as of March 2023. Meanwhile, NESFB’s valuation has been pegged at around $72.4 million.
For financial technology companies, this move comes as a lifeline as it opens up another avenue for scaling up operations.
In this article, we explore how fintech companies can lay the foundation and prepare for a probable merger-like scenario with a bank in the future.
Getting a banking license in India is a big deal. RBI scrutinizes applications under a microscope. Earlier this year in July, the RBI rejected three applications for small finance bank licenses, maintaining its reputation for being a taskmaster. In 2022, the regulator had rejected 6 licenses as it found it unsuitable.
One exception was the central bank’s green signal in 2021 to Resilient Innovations Pvt. Ltd (owned by fintech unicorn BharatPe) to buy a 49% stake in Unity Small Finance Bank. But, then this was a distress sale, where RBI was doing its job of safeguarding the deposit holders’ interest.
PwC’s 2021 report on neobanks in India delved into the ambiguity surrounding regulations for smaller digital financial institutions. Neobanks is a term used for financial institutions or fintech companies that operate digitally, without a physical presence. “Currently, unlike neobanks, the regulatory regime does not envisage a completely digital method of offering financial products. It is extremely critical that the current indirect regulations are relooked at in light of the digital offerings of neobanks and their relationship with financial entities.”
Transaction Value in the Neobanking Market
For a fintech company, opting to go through the due diligence of getting a bank license and following regulatory norms can prove to be a headache. At present, RBI rules state that a payments bank or an NBFC with a successful track record of 10 years is eligible to apply for a bank license. This may seem like a long wait for a fintech company as it may take years for some companies to even break even.
A fintech company usually has three options when it comes to the renewal of its license. One, it either applies for a non-banking finance company license with the RBI. Two, it can choose to join hands with another fintech company. And three, taking the heartbreaking decision of shutting shop in case they don’t rake in enough value. The option of merging with a small finance bank as a business objective was never really given much thought, until now.
Meanwhile, for a small finance bank, merging with a fintech company is a shortcut to upgrading its technology, staying relevant to the youth, and paring its losses to some extent. North East Small Finance Bank reported losses for the third straight year with losses widening to ₹288 crores in 2022-23. Its net worth dropped to ₹60 crore, much lower than RBI norms of maintaining a net worth of ₹200 crore. A section of the media has raised eyebrows over the shelf-life of this collaboration, given the losses on both sides and the contrasting cultures in both organizations.
However, the Slice-NESFB merger seems to be a well-planned strategy and not a spur-of-the-moment decision. In March, Slice acquired a 5% stake in NESFB, to get “comfort”. Media reports have also quoted an unnamed source from the company claiming that Slice had been following through with due diligence over the past 15 months to get the deal through.
True to their nature, startups, and fintech companies prefer to see this merger as a window of opportunity rather than view the deal with scepticism.
Before celebrations begin within the fintech space, it is time for companies to ponder over making the most of this development. How can they be the next in line as far as envisioning their banking ambitions are concerned? Taking cues from this new-age merger, we enlist a few parameters on which fintech companies can buckle up and chart a similar route to growth:
Self-regulate Prudently
Fintech companies have long borne the ‘bad boy’ image in the eyes of the regulator.
In 2022, RBI barred non-banking entities from embedding credit lines in their loading PPIs (prepaid payment instruments) such as prepaid cards or mobile wallets. This decision had hit Slice itself which then applied for a PPI license and received it by the end of 2022.
Recently RBI Governor Shaktikanta Das asked fintech companies to form a self-regulatory organization. In RBI’s view, such an organization would help to evolve best practices, protect privacy and data norms, avoid mis-selling, and promote ethical business practices.
“You need to think you are already a small finance bank and create those kinds of capabilities within the organization before the regulator would even consider something like this,” said Yogi Sadana, Founder and CEO of Zype Loan App. He added, “Unlike an NBFC, the amount of opportunities and liabilities that rests on a bank which a banking license allows taking customer deposits, to open bank accounts, that’s a completely different ball game altogether as compared with an NBFC which was not taking customer deposits, in terms of governance standards, in terms of operating stats, cheques, and balances, more importantly, the management. “
It’s only a matter of time before RBI comes cracking the whip on those who fail to comply, which could in turn tarnish the company’s image.
“Eventually they (fintechs) should be ready to come under regulation…the framework for regulation may come. RBI does not leave any stone unturned to leave anybody out of their purview,” said Jaslene Bawa, from Flame University who has worked as a financial market researcher in the corporate sector.
Bawa also said that having rigid mechanisms, assessing credit profiles, regular audits, keeping an easy cash flow, and creating a robust board can help a fintech or an NBFC get bank-ready.
Play to Your Strengths
Setting up an intricate financial technology infrastructure for a mid-sized or a small bank is an exhaustive process. In such a scenario, merging with a fintech company is akin to adding a bit of zing to their portfolio. In addition, fintech apps are a popular choice among the youth, giving ready access to a younger customer base, albeit small to begin with.
“Strategic plan for a fintech should be how nimbly can they set this (technology) up. Can they set it up internally or do they need to acquire an existing company with skill sets and reputation which can marry their reputation, culture, and ethos so that integration of both is seamless and easier,” said Badrinarayan Vedanthan, a banker with 26 years experience across MNCs, SME and MSME/Rural Finance business sectors. Vedanthan, now an independent financial consultant, also previously served as the head of strategy at Suryoday Small Finance Bank.
Slice’s main target has been the Gen Z and millennial crowd. In a media interview in 2021, Rajan Bajaj, founder of Slice emphasized how they would continue to target the young segment, despite their high-risk profile. “The average age of slice’s customers is 23-24, which differentiates us from the rest. We understand the risk and demand profile of this young customer and know how to help them navigate through their finances. At present, there is no other solution at a slice’s scale in the market that can cater to the needs of this generation in a transparent and scalable manner.”
Fintech companies should play to their strengths as far as their technological reach is concerned. Digital payments have revolutionized the way Indian banks and organizations have managed to get millions of unbanked individuals into the purview. RBI’s Das acknowledged this feat in his speech at the G20 summit held in September.
Just a month before the Slice-North East Small Finance Bank merger was announced, RBI Deputy Governor Rabi Sankar took note of the upper hand that fintech companies possess. Sankar said, “An arrangement of financial institutions buying services of fintech companies was “functional” adding, …fintech entities can perform functions where they have a competitive advantage and banks focusing on areas of their expertise. While customers benefit from an improved experience with curated products and services at competitive prices…”.
Customer is King
A customer-service-oriented approach will help a financial technology company deepen its stronghold and make it an attractive proposition for merging.
“Banking is not just a business, it’s a responsible service, so if they wish to merge with any such entity, they have to make sure that the customer is well taken care of,” said former banker and head of department – finance at Lexicon MILE, Dr Manju Chopra. “Secondly, they (fintech companies) can go slow on the entire due diligence, the valuation study. Don’t hurry into valuing or finding these banks, ensure that synergies are very very high,” she added.
The segment and geographies where a fintech company operates could also end up being their USP (unique selling point). Deepening that stronghold could turn fintech into an attractive proposition.
RBI’s Das has himself stressed the three key aspects that will make fintech “future-ready”.
“…key issues which are critical for the Fintech ecosystem to be stable and future ready. In this context, three critical issues, viz., customer centricity, governance, and self-regulation merit attention.”
On the surface, this merger seems like a foot in the door for financial technology companies’ growth, but it has raised many eyebrows for its “unusual marriage” of two contrasts.
It’s indeed an uphill task for both entities to find a middle ground as far as expanding their customer base, scaling up technology, and customer data sharing are concerned. Only time will tell if these opposites, who have attracted themselves to each other, will result in a honeymoon period for customers.
Unarguably, the merger has set the ball rolling for a number of possibilities for fintech companies and small finance banks to stay afloat. In the meantime, it only makes sense for these smaller players to clean up their image and books so that they are not caught by surprise when the RBI comes knocking at the door.
This article has been contributed by Kunal Mehta, Founder and Director, Arthan Finance.
The fintech industry has been growing and developing rapidly with the introduction of digitization in various aspects of the system. The traditional format of banking has evolved at a great speed, especially since the pandemic. NBFCs operating in the fintech sector have seen significant growth in recent years. With technology driving growth in almost all sectors, there is a greater need for a smoother financial system interface. Fintech NBFCs, or non-banking financial companies, have enhanced the financial experience of customers by offering innovative, technology-driven solutions. There has been a major shift towards digital and cashless transactions, creating greater and better opportunities for NBFCs to expand their businesses and portfolios.
However, with technology constantly upgrading and shifts in consumer behavior and demands on the market, the NBFCs must continuously adapt to stay ahead of the curve. Along with digital solutions, NBFCs also need to embrace technologically-driven solutions for the best customer experience.
Since the pandemic, market shifts and wavering demands have put some pressure on the fintech companies to thoroughly analyze the futuristic demand. In order to stay relevant, NBFCs should be able to understand the nature of the demands of their customers and their futuristic needs. Some of the changing market trends that will shape the fintech industry in the coming years are:
Although fintech companies have been established through technology, NBFCs must continue to invest in building and adopting new technology and digital infrastructure that will help streamline internal processes, enhance customer experience and collect data that will help them understand the future needs of their customers.
Amplifying Security
In recent years, there have been a lot of fraudulent cases relating to online and digital payments. This has made people wary of using technology for their day-to-day transactions. There is a dire need within the fintech sector to strengthen their security and protect the trust of their customers. With digital payments becoming the new norm, designing a high-security transaction system will help NBFCs boost growth and expand their customer base.
Expansion into New Geographic Markets and Product Lines
One of the biggest assets of the fintech sector is easy accessibility. The consumer can conduct all financial transactions at the tip of their fingers. However, in order to make their services available and known, NBFCs need to venture into new geographical markets and market their products locally. This expansion will help to increase the reach of NBFCs and create new business opportunities. Additionally, expanding their product portfolio will help NBFCs reach out to a bigger market and create more opportunities for business.
Blockchain Technology
Blockchain technology is increasingly being adopted by the fintech sector for its potential to improve transparency, security, and efficiency in financial transactions. It enables the creation of secure and decentralized ledger systems that can facilitate a range of applications including digital payments, smart contracts, and decentralized finance (DeFi). Blockchain technology can help improve financial inclusion by enabling faster, cheaper, and more secure transactions for individuals and businesses, and can also reduce fraud and errors in financial transactions. Additionally, it has the potential to streamline various financial processes, from remittances to insurance claims, by eliminating intermediaries and increasing transparency. NBFCs need to gradually experiment with integrating this technology to understand its pros and cons on the user experience and business.
AI-driven Data Solutions
One of the biggest boons within technology has been AI-driven data collection, segregation, and solution. NBFCs should look into amalgamating AI in their systems and allowing AI to understand customer behavior. This will help fintech companies to provide customized products and services to their customers, benefitting both, the company and the consumers and driving major value creation.
IoT Technology has been effectively changing the dynamics of the financial landscape. IoT has excellent data analytics capabilities that can help segregate millions of data points in seconds. Additionally, it can swiftly detect hackers, attacks on the system, and malware being uploaded. This can help NBFCs detect fraudulent activities and increase the security of their system and protect the data of their customers. IoT can also help mitigate risks for secured and unsecured loans while improving consumer engagement.
Hyper Automation
With new technology within AI and deep learning being designed and introduced, process automation would be the next fintech market trend to be adopted. From deploying chatbots and introducing deep learning to understand customer behavior, Hyper Automation will reduce paperwork, increase efficiency, enhance decision-making, and make the entire experience seamless for the customer.
MetaVerse Fintech
The biggest revolutionary technology, the MetaVerse, is one of the most innovative and crucial technological development. With proper development, MetaVerse will become a universe of its own, drawing customer engagement and driving value creation through various services. Fintech companies must look out for MetaVerse Technology as it is fast evolving and still new in its phases. With fintech MetaVerse, customers will be able to conduct their banking and financial activities and transactions in a virtual reality format. This, in a way, will be building a full circle.
With technology making it easier for customers to conduct transactions on their phones introducing MetaVerse where customers can enter virtual reality and experience traditional banking services. This will be revolutionary for NBFCs as it will allow them to provide a personal touch and experience to their customers and help retain them. It will also open up new opportunities and avenues for customer engagement and build loyalty and trust.
Conclusion
Fintech companies and NBFCs have been leveraging technology to improve the customer experience, making it faster and more convenient for users. By adopting new technology, expanding their reach, and building avenues to retain customers, NBFCs have a huge opportunity for growth and development in the coming years. Fintech companies need to stay focused on creating business strategies that will help them integrate new technology in a seamless manner, which will enhance the consumer experience.
When it comes to a business the most significant thing is funding and if it’s a startup, funding becomes more important. The survival of a business hugely depends on it. In a startup, funding is important so that the business can meet its expenses, as the profit will be mediocre at first.
Finance is the fuel needed to run any business. There are numerous stories of entrepreneurial ventures which could not survive despite having great potential tanking, due to a shortage of funding. Getting funds is especially challenging when a business is in the startup stage. Hence, it is important for emerging entrepreneurs to be aware of the various startup company funding options.
According to a report, Indian startups raise a record $3.9 billion so far in 2019. So we have compiled a list of sources from where you can raise funds for startups, in India.
When loans are given by individuals or a group of people instead of banks and other financial institutions, such loans are known as micro-loans and the technique is called microlending. Micro-loans can be a good source of startup funding for small businesses. Microloans are unsecured loans. The credit score of the borrower is a guiding factor for the lender; it helps in deciding the interest that the borrower would pay to the lender in addition to the original principal amount.
Crowdfunding
Crowdfunding
Using an online platform, individuals interested in raising funds for their initiative can make use of crowdfunding. The investor gets some form of equity or reward in exchange for the contribution. KickStarter, GoFundMe and Indiegogo are some of the most popular and top-ranked crowdfunding sites. Crowdfunding is a good startup funding process because it is easier to acquire than traditional bank loans.
Line of Credit
Once approved for a ‘line of credit’, the borrower gets access to a pool of money. But only when he actually takes out some amount i.e. borrows from the pool, he is subjected to the interest that would be charged. The benefit of this type of loan is the low-interest rate charged as compared to bank loans or NBFC loans.
Equipment Financing
As the name suggests, equipment financing involves machinery or some other item instead of monetary funds at disposal. The idea is to allow businesses to save money on purchasing equipment and use the same for other purposes. So equipment financing can be the funding option for startups that require equipment and machinery.
Angel Investors
Wealthy people who are interested in assisting the business owner through debt-free funding are known as angel investors. They ask for a stake in the ownership of the business and provide advises and suggestions from their own experiences. Such investors usually back early-stage startups that can generate a massive turnover in the future. So if you have a great business plan, then approaching angel investors can be one of the best ways to raise capital for the company.
Venture Capitalists
There are many venture capitalists that readily provides fund for a startup. People often use the terms venture capitalists and angel investors interchangeably without understanding that there are more than just subtle differences. Unlike angel investors, venture capitalists are proper firms aimed at helping businesses to develop. The venture capitalist plays an active role in running the business. Apart from purchasing stakes in the business, the firm has a say in the business’s decisions. There are two types of entities in such firms—‘limited’ partners who inject cash into the venture capitalists’ funds meant for assisting startups, and ‘general’ partners who work alongside the startup by engaging with the startup’s management in business-related decisions.
Government Grants
The central authority of the country also provides loans for startups in different sectors of the economy. In India, there are various schemes such as Credit Guarantee Scheme, MUDRA loan scheme, and Stand Up India scheme under which the Government provides funds to startups.
Also, there are schemes introduced by the State Government of different states of India, like Rajasthan Startup Fest, Kerela State Self Entrepreneur Development Mission, Sarothi startup loan by the Govt of Assam.
Peer to Peer Loans
In P2P lending, people (excluding banks and financial institutions) lend to those in need of money. Now, this may seem like crowdfunding but there’s a significant distinction: In peer-to-peer lending, the borrower has to repay the original principal along with the interest accrued. This isn’t part of crowdfunding, where the investors may not necessarily pay money to the lenders in exchange for their contribution; it could be a reward exchange program as well.
Business Credit Cards
As the name suggests, business credit cards allow borrowers to access a pool of money with a credit limit for transactions. Credit cards are suitable for financing short-term needs and immediate requirements. Just like ordinary credit cards, the card owner is liable to be penalized if the borrowed amount is not repaid in full at the end of the billing period.
Bank and NBFC Loans
Lastly let’s talk about the traditional method of funding, the bank, and NBFC loans. Banks provide term loans, working capital loan,s and asset-backed loans. NBFCs provide business loans too. But the issue with most banks and NBFCs is that they offer unsecured loans to only such businesses that have been in business for at least 2 years and which are earning a specific amount of profit.
While approaching someone for a loan for your startup, ensure that you have an excellent business plan. A business plan is the heart and soul of your initiative or project. It should cover the minute details, must be easy to comprehend, engaging, and enticing at the same time. Above all, it’s the attitude brimming with confidence and the ability to convince that would either make or break the deal!
Conclusion
If you are thinking about long-term sustainability then funding is highly recommended. Funding also helps you to explore the current market opportunities as well. Before going for funding, you need to understand what type of funding is actually needed for your business. The entrepreneur needs to be very careful while selecting the type of funding they are going to choose for their business.
FAQs
Can businesses use GoFundMe?
To start funding for a business, people can use GoFundMe.
What is Startup Funding?
Startup funding means the amount of money required to start and build a new business.
