India's Yes Bank freeze leaves processors in the cold
The Reserve Bank of India has temporarily halted operations at the struggling Yes Bank, leaving fintechs without a place to process payments.
RBI attributed the move to bad loans to struggling companies, and also placed a cap on withdrawals by INR (Indian rupee exchange) customers until April 3. The central bank decision has adversely affected about 20 third-party fintechs supported through YES Bank for QR code payments and through the National Payments Corporation of India's Unified Payments Interface.
Payment firms PhonePe and BharatPe, which accounts for 40% of Yes Bank's UPI payments share, were among the firms unable to execute transactions. PhonePe, which is used by more than 175 million users and had an exclusive relationship with Yes Bank, has been hardest hit. Walmart's India payment service also suffered a glitch on Thursday due to the Yes freeze.
PhonePe chief executive Sameer Nigam sent aTwitter message to customers apologizing for the inconvenience of the "long outage." Other third-party fintechs facing similar difficulties include Entrackr, Cred, Udaan, Neo-bank, Cashfree, Razorpay, MakeMyTrip, Myntra, Ezetap and Swiggy. Yes Bank's own internet banking service has not been in operation since midnight on Thursday.
The bank crisis has spilled over into politics, with sparring between Union finance minister Nirmala Sitharaman and senior Congress leader P Chidambaram. Sitharaman blamed the delivery of loans to stressed corporates as the reason for financial troubles at the private lender, according to a Times of India report.
Chidambaram, a former Union finance minister, via Twitter charged that the crisis has "been in the making for years and the government did practically nothing except talk to the RBI."