Food and grocery delivery giant Zomato has announced its decision to withdraw its application for a non-banking financial company (NBFC) licence, signaling its exit from the lending business. The decision, approved by the board of Zomato Financial Services Limited, a wholly owned subsidiary, was disclosed in an exchange filing on July 2.
“There is no material impact on the revenue/operations of the company and this disclosure is being made voluntarily,” Zomato stated.
This move marks a significant shift in Zomato‘s business strategy. The company had entered the lending sector in 2020 to support its partner restaurants with working capital loans during the COVID-19 pandemic. To facilitate this, Zomato incorporated Zomato Payment Private Limited (ZPPL) in August 2021 to apply for payment aggregator (PA) authorization and registered Zomato Financial Services in February 2022. However, the company did not succeed in obtaining its NBFC licence.
In the March quarter, Zomato surrendered its PA/PG license and wrote down Rs 39 crore worth of investments in ZPPL. Despite these setbacks, the Zomato stock closed at Rs 208.52 on the National Stock Exchange (NSE), up 2.23% from the previous close.
This decision follows reports from Moneycontrol on May 29, which indicated that Zomato was in discussions with several NBFCs to provide working capital loans to its partner restaurants. However, the company has now decided to discontinue its efforts in the lending business altogether.
