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The Reserve Bank of India (RBI) has rejected the banking license application of Chaitanya India Fin Credit Pvt Ltd, the company owned by Flipkart co-founder Sachin Bansal.

Three applicants, including Navi Technologies subsidiary Chaitanya India Fin Credit, were found to be ineligible under the guidelines for on-tap licensing of universal banks.

The central bank’s announcement came as Bansal was speaking at a virtual press conference to launch Navi Finserv’s first issuance of 600 crore non-convertible debt securities (NCDs).

Navi Finserv is the non-banking finance arm of Navi Technologies.

However, Bansal said it wasn’t the end of the road and the company would also consider reapplying. “We will evaluate the written response and determine our next course of action. Many options are ahead of us and there are many things to consider, such as wait for the RBI’s written responses and then respond,” Bansal said.

“We will consider whether to appeal and weigh our options,” he added.

Navi Technologies, which is planning an IPO, submitted the draft papers to the Securities and Exchange Board of India (SEBI) in March. The fintech intends to raise 3,350 crore through this issuance.

The company offers personal loans, home loans, general insurance, wealth management services and microfinance loans.

Promoter Sachin Bansal, who owns 97.77% of the shares in the company, will not sell his shares in the IPO. The majority of the proceeds from the IPO will be invested in two of the company’s subsidiaries – Navi Finserv Pvt Ltd (NFPL) and Navi General Insurance Ltd (NGIL).

The financing of the two subsidiaries is intended to help them cover their future capital requirements. The rest will be used for general corporate purposes, the company said in its draft Red Herring Prospectus (DRHP) filed with the Markets Authority.

Bansal left Flipkart in 2018 when US retail giant Walmart bought a 77% stake in the e-commerce company for $16 billion. His efforts reportedly netted him $1 billion. Since then, Bansal has invested in various startups in the country.

Navi Finserv NCD problem

The NCD edition begins May 23, 2022 and is scheduled to close on June 10, 2022, with the option of early closure or extension. The company said the NCDs will have a face value of ₹1,000 each for an amount of up to 300 crore, with a greenshoe option to retain an oversubscription of up to 300 crore.

Investors will have the opportunity to participate in secured NCDs in various series for 18-month and 27-month terms with effective yields of up to 9.80% and a minimum application size of ₹10,000, the company said.

Cheryl Tenny

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