Amid headwinds, Xiaomi winds down its financial services in India
Xiaomi hasn't been having the best of times in India. The Chinese company has come under a lot of government scrutiny in recent months. It has now decided to call it quits on its financial services in the country, according to TechCrunch. Xiaomi's Mi Pay and Mi Credit will no longer be functional in India. The company has not responded to the report yet.
Why does this story matter?
- India's fintech space is growing at a mouth-watering pace. Projections say that this growth will continue in the coming years.
- This has made companies around the world craving for a piece of this lucrative pie. With that being the situation, when a company like Xiaomi withdraws from the segment, it raises several eyebrows.
- It is surprising at the very least.
Mi Pay, Mi Credit have been removed from app store
Xiaomi had launched its financial services in India with the Mi Pay app in 2019. The app allowed users to make UPI payments. Later that year, the company introduced Mi Credit, which lent users anything between Rs. 1,000 and Rs. 2 lakh. Both apps are not functional in India anymore. The company recently removed them from its own app store as well.
Xiaomi's withdrawal from India's fintech space is a surprise
Xiaomi's silent withdrawal from India's fintech space is a surprise to many. Last year, Manu Jain, the company's then India head, had talked about Xiaomi's ambition to become one of the biggest players in the fintech space. There were even talks about adding more services such as gold loans, credit cards, and insurance packages.
New RBI guideline on digital lending may have discouraged Xiaomi
The pertinent question here is, why has Xiaomi shut its financial services in a lucrative market such as India? One reason could be the changing fintech space. With the Reserve Bank of India's new digital lending guidelines, there will be more restrictions on lenders. The fintech space will be more regulated than before. This may have discouraged Xiaomi from India.
Xiaomi has been under intense scrutiny by Enforcement Directorate
Are stringent regulations enough to drive away a company from an industry that could be worth $1 trillion by 2025? It's quite unlikely. This leads us to the next potential reason for Xiaomi's withdrawal - frosty relationship with the government. The company has come under intense scrutiny by central agencies. Xiaomi may have realized that involvement in fintech will invite further scrutiny.