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Business News/ Companies / Start-ups/  RBI seeks details on Flipkart’s FX Mart deal
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RBI seeks details on Flipkart’s FX Mart deal

The move may delay the proposed launch of a digital wallet by India's largest e-commerce firm

Flipkart, which has been in talks with RBI for its own wallet licence for over two years now, bought FX Mart as the latter owns a prepaid wallet licence. Photo: Priyanka Parashar/MintPremium
Flipkart, which has been in talks with RBI for its own wallet licence for over two years now, bought FX Mart as the latter owns a prepaid wallet licence. Photo: Priyanka Parashar/Mint

Bengaluru/New Delhi: The Reserve Bank of India (RBI) has sought more details of Flipkart’s acquisition of FX Mart Pvt. Ltd, which holds a prepaid wallet licence, delaying the proposed launch of a digital wallet by India’s largest e-commerce firm, three people familiar with the matter said.

Singapore-registered Flipkart Payments Pvt. Ltd, a subsidiary of Flipkart Pvt. Ltd, Singapore, paid 45.4 crore for a majority stake in FX Mart, according to documents available with the Registrar of Companies (RoC), Mint reported on 1 September.

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

“Any change in shareholding or change in board composition is an event to be approved by RBI," states the licence certificate, a copy of which has been reviewed by Mint.

Flipkart, which has been in talks with RBI for its own wallet licence for over two years now, bought FX Mart as the latter owns a prepaid wallet licence. Flipkart had planned to use the licence 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.

“RBI has asked Flipkart to share the new shareholding structure and the financial details of the transaction," said one of the three people cited above. “If Flipkart fails to meet RBI’s requirements, it can roll back FX Mart’s licence," he added.

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

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

Flipkart is not the only company trying to get a wallet licence by acquiring or buying as stake in a firm with an approved wallet licence.

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

Mint reported on 10 October that Ola invested close to 3.2 crore for a 3.4% stake in June while Aggarwal bought a 2.56% stake by investing 1.2 crore in March.

Ola has also taken charge of ZipCash’s board with Ola executives—chief financial officer Mitesh Shah and head of Ola Money Rushil Goel—getting seats even as founder Vivek Saxena and director Vivek Burman resigned from the board of the company.

Saxena and Burman are also believed to have sold part of their stake in the company to Ola. Mint could not independently verify the details of the secondary stake sale.

“There are no guidelines in the payments sector that stop the acquisition mechanism. However, when RBI grants a licence it clearly states that this licence cannot be transferred in any way," said Shinjini Kumar, leader-Banking and Capital Markets at PricewaterhouseCoopers Pvt. Ltd, a consulting firm.

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

FX Mart is Flipkart’s second acquisition in digital payments. It bought another payments start-up NGPay (Jigrahak Mobility Solutions Pvt. Ltd) last year, although no new payment technology or service has come out of that company so far.

Flipkart also closed down its payment gateway Payzippy in August 2014 after the product failed to sell the service to as many customers as the company had expected.

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Published: 14 Oct 2015, 07:38 AM IST
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