Flipkart FX Mart deal under RBI scanner

MUMBAI, INDIA: The acquisition by Flipkart of FX Mart to expand its foray into the digital wallet space has come under Reserve Bank of India (RBI) scanner.

The Reserve Bank of India (RBI) has sought more details of Singapore-registered Flipkart Payments’ acquisition of FX Mart, which holds a prepaid wallet license, delaying the proposed launch of a digital wallet by India’s largest e-commerce firm; Mint quoted three people familiar with the matter.

It said that the e-commerce player is already in talks with RBI for its own mobile wallet license for over two years now, bought FX Mart which owns a prepaid wallet license.

However, acquisition of a company with a mobile wallet license requires approval from RBI and the two companies are yet to get the regulator’s nod.

Flipkart, which has been in talks with RBI for its own wallet license for over two years now, bought FX Mart as the latter owns a prepaid wallet license. Flipkart had planned to use the license to offer a digital wallet on its app and Myntra’s, but the banking regulator has expressed reservations about the deal, putting Flipkart’s plans on hold.

As per the license certificate, a copy of which reviewed by Mint stated, “Any change in shareholding or change in board composition is an event to be approved by RBI.”

“RBI has asked Flipkart to share the new shareholding structure and the financial details of the transaction,” Mint quoted a source. “If Flipkart fails to meet RBI’s requirements, it can roll back FX Mart’s license,” he added.

Flipkart declined to comment and FX Mart did not respond to Mint’s e-mail queries.

However, there’s a ray of hope for the two companies. “There are no guidelines in the payments sector that stop the acquisition mechanism. However, when RBI grants a license it clearly states that this licence cannot be transferred in any way,” said Shinjini Kumar, Leader, Banking and Capital Markets, PriceWaterhouseCoopers, a consulting firm.

“A change in management can be seen as a change in license. So the new management cannot take the license for granted,” she added.

It must be recalled that FX Mart was started in 2013 by entrepreneur Amit Narang. The company offers electronic payment, foreign exchange and travel services.

Also earlier this week, India’s largest taxi-hailing service, Ola, run by ANI Technologies, together with co-founder Bhavish Aggarwal, acquired a minority stake in ZipCash Card Services, a company with a wallet license.