Zomato withdraws NBFC licence application, exits lending business
What's the story
Zomato, the food and grocery delivery giant, has decided to withdraw its application for a non-banking financial company (NBFC) licence. The announcement was made on Tuesday in an exchange filing by Zomato Financial Services Limited, a wholly owned subsidiary of Zomato. The company clarified that this decision would not materially impact its revenue or operations. Following the announcement of Zomato's decision to exit the lending business, its stock ended the day at ₹208.52, up 2.23% on the NSE.
Past initiatives
Zomato's previous endeavors in lending business
Zomato had initially entered the lending business in 2000 to support its partner restaurants during the Covid pandemic. On May 29, it was reported that Zomato was discussing with several NBFCs to provide working capital loans to these partners. The company had incorporated Zomato Payment Private Limited in August 2021 and registered Zomato Financial Services in February 2022 for this purpose.
Financial impact
Zomato fails to secure NBFC licence, writes down investments
Despite its efforts, Zomato failed to secure an NBFC licence. According to a report by Moneycontrol, the company surrendered its payment aggregator (PA) authorisation and wrote down ₹39 crore worth of investments in Zomato Payment Private Limited (ZPPL) in the March quarter. This move marked the end of Zomato's venture into the lending business. Zomato is currently in advanced negotiations to acquire Paytm's movie ticketing and events business to enhance its 'Going out' offerings.