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India, the new hub of neobanks

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By providing people with the right incentive structure and behavioural nudges, we can help get customers ready to adopt digital financial services. -Nilesh Agarwal, co-founder CEO, Yelo

Regulatory initiatives


Reserve Bank of India’s guidelines does not allow a 100% digitalisation of banks. In India, neobanks are not granted their banking licences. The neobanks provide financial services by partnering with licensed banks. For example, Digibank, a neobank launched by DBS bank in 2016 received approval from RBI to operate as a wholly-owned subsidiary of DBS. Digibank is DBS bank’s digital spin-off and operates as an independent neobank.

Payments bank

A type of bank gaining recognition in India is the Payments bank. Payments banks offer their services completely online. They are recognised as payments banks under Section 22 of the Banking Regulation Act, 1949. While these banks can accept deposits i.e., current deposits, and saving banks deposits (up to INR 1,00,000), issue ATM or debit cards, and offer retail banking and intra-banking transactions services, they cannot issue loans or credit cards to their users.

However, in 2019, Paytm payments bank in collaboration with CITI Bank launched India’s first unlimited cashback credit card which is offered to limited customers based on their digital behaviour. Moreover, to access the services provided by payments banks, the customer must have an existing bank account with a traditional bank. Thus, we classify payments bank under the digital platform category of neobanks. To further read about the type of neobanks, read the article Neo banking 2.0: The new face of banking in the Asia Pacific

On tap licensing framework

Moreover, in December 2019, RBI issued guidelines for on-tap licensing of small finance banks (SFBs) in the private sector, which allow the creation of banks specifically targeting the unserved and underserved small business units, small and marginal farmers, and micro and small industries. These guidelines enable payments banks, such as Fino payments bank, Airtel payments bank, and Paytm payments bank, microfinance banks and non-banking financial institutions (NBFCs) to apply for the licence. The entities must have a track record of conducting business for 5 years in addition to a minimum paid-up capital of INR 200 crore to convert into small finance banks.

Snapshot of India’s neobanks

Table 1: Profile of India’s neobanks
Name Founding year CEO Annual revenue
Fino Payments Bank 2006 Rishi Gupta US$ 93.85 Million (Net revenue FY20)
SBI YONO*2017 Rajnish Kumar Undisclosed
Kotak 811*2017 Uday Kotak Undisclosed
Digibank*2016 Surojit Shome Undisclosed
NiYo 2015 Vinay Bagri Undisclosed
Open 2017 Anish Achuthan Undisclosed
RazorPay X 2014 Harshil Mathur US$ 18.9 Million (FY19)
Yelo 2014 Nilesh Agarwal US$ 1.18 Million (FY18)
InstantPay 2013 Shailendra Agarwal US$ 14.6 Million (FY18)
Hylo 2019 Vishal Gupta Undisclosed
Payzello 2017 Pruthiraj Rath Undisclosed
IPPB**2018 J Venkatramu US$ 6.57 Million*** (FY19)
Ezo Bank2019Gauravkumar KateUndisclosed
Zeta 2015 Bhavin Turakhia Undisclosed
Jupiter 2019 Jitendra Gupta Undisclosed
Finin 2019 Suman Gandham Undisclosed
Namaste Credit 2014 Gaurav Anand Undisclosed
Walrus 2019 Bhagaban Behara Undisclosed
Slice 2016 Rajan Bajaj Undisclosed
Fi 2019 Sujith Narayanan Undisclosed
Jio Payments Bank**** 2016 H Srikrishnan US$ 2.8 Million (FY18)
NSDL Payments Bank 2014 G.V. Nageswara Rao US$ 29.6 Million (FY19)
Paytm Payments Bank 2010 Satish Kumar Gupta US$ 204.5 Million (FY19)
Airtel Payments Bank 2017 Anubrata Biswas US$ 64.6 Million (FY20)
Revolut2021Paroma ChatterjeeUndisclosed
Source: Twimbit analysis
*These neobanks are built on their own parent banks’ existing funds.
**Setup under the Indian Post, Department of Post, Ministry of Communication with 100% equity owned by Government of India
***IPPB revenue include their total business stemming from both the digital spin-off and traditional offline banking activities.
**** Jio Payments Bank is a joint venture between SBI (30%) and Reliance industries (70%).
Note: Zyro, and Atlantis are newly formed neobanks in 2020 with limited to no available information.

Table 2: Learning list of India’s neobanks funding capital

NameFino payments bank
Total funds raisedUS$ 52 Million
Equity round 1US$ 37.6 Million (July 2016)
Equity round 2US$ 20.3 Million (Jan 2017)
Total funds raisedUS$ 55.2 Million
Seed capitalUS$ 1 Million (July 2016)
Series AUS$ 13.2 Million (Jan 2018)
Series BUS$ 35 Million (July 2019)
Corporate roundUS$ 6 Million (August 2020)
Total funds raisedUS$ 37.4 Million
Seed capitalUS$ 2.4 Million (May 2018)
Series AUS$ 5 Million (Jun 2018)
Series BUS$ 30 Million (Feb 2019)
NameRazorPay X
Total funds raisedUS$ 124.7 Million
Seed capitalUS$ 2.6 Million (March 2015)
Series AUS$ 9 Million (Oct 2015)
Venture capital 1US$ 100,000 (July 2016)
Series BUS$ 20 Million (Jan 2019)
Series CUS$ 75 Million (Jun 2019)
Venture capital 2US$ 28 Million (Oct 2019)
Total funds raised – Seed capitalUS$ 4.6 Million (Dec 2016)
Total funds raised – Corporate roundUS$ 60 Million (July 2019)
Total funds raisedUS$ 26 Million
Seed capitalUS$ 24 Million (Nov 2019)
Venture capitalUS$ 2 Million (April 2020)
NameNamaste Credit
Total funds raised – Series AUS$ 3.8 Million (April 2018)
Total funds raisedUS$ 28.6 Million
Seed capitalUS$ 500,000 (Feb 2016)
Series AUS$ 2 Million (Oct 2017)
Series A US$ 14.9 Million (September 2018)
Debt financing US$ 3.4 Million (Sep 2019)
Debt financingUS$ 1.4 Million (Oct 2019)
Series BUS$ 6.2 Million (June 2020)
Seed capitalUS$ 13.2 Million (Jan 2020)
Series BUS$ 30 Million (Feb 2021)
NamePaytm Payments Bank
Total funds raised – Two venture capital roundsUS$ 28.2 Million
NameAirtel Payments Bank
Total funds raised – Initial investmentUS$ 484.3 Million

In-depth neobank analysis on the 5-building block framework

Customer centricity:

  • Every established neobank in India exemplifies a superior experience for their customer and fulfils at least one parameter under customer-centricity.
Figure 1: India’s neobanks represent all customer centricity parameters
Note: Revolut is a newly launched neobank in India and it’s public interface is not live yet. As a result, we are not commenting on their customer-centricity.

Customer reach:

Out of the 27 neobanks in India:

  • InstantPay serves over 50 million across all 3 customer segments- SME, rural, and Millennials.
  • Revolut serves the 500,000+ businesses (SME) and 15 million+ people (millennial) globally.
  • 67% of the neobanks exclusively serve the millennial segment.
Figure 2: Customer segment and total number of customers

Product stack:

  • 8 of the 27 neobanks in India offer their customers with unique payments options such as virtual debit cards, split payments, and credit cards.
  • Digital platforms Razorpay X, InstantPay, NiYo, Walrus, and Slice have unique accounts such as multi-currency, and teen and kids’ account.
  • Digibank, SBI YONO and InstantPay provide business/personal overdraft facilities in addition to offering basic loan services.

Methodology: Each neobank’s product stack is a representation of 4 key parameters across 11 product types

  1. Unavailable: Does not have a product type in their stack
  2. Testing: The product is currently in the pilot-testing phase, not live to all customers
  3. Established: The product is a part of their stack and fully available for customers
  4. Unique: A unique offering within a product type which is exclusively provided by the neobank
Figure 3: Representation of each neobank’s product stack

Partnership ecosystem:

  • Since RBI does not allow the 100% digitalisation of banks, the neo banks in India collaborate with traditional banking institutions to offer financial services. The major banking partners are State Bank of India (SBI), ICICI Bank, Kotak Mahindra Bank, IDFC First Bank, Yes Bank, HDFC Bank, RBL Bank, Federal Bank and Lakshmi Vilas Bank.
  • The leading network/payment provider in the Indian neo banking arena are Rupay, Mastercard and Visa.
  • Top insurance partners for Indian neobanks include Bharati AXA, Tata AIA, Aviva, Birla Sun Life, Punjab National Bank, Kotak Life Insurance, ICICI Prudential Life Insurance, and Bajaj Allianz.
Figure 4: Partnership ecosystem of India’s neobanks

Open Banking:

  • The open banking ecosystem in India has grown tremendously with the advent of Unified Payments Interface (UPI), thus enabling consumers to make real-time payments with ease. Several banks have taken the initiative to build their own Open Banking ecosystems such as API gateways, API stack players, account aggregators and so on.
Table 3: API Developers for India’s neobanks
Name Sandbox/Developer
Fino Payments Bank PayRupees AePS
Kotak 811* Kotak developer connect
Digibank* DBS Developers
Open Open developers
RazorPay X Razorpay API
InstantPay InstantPay API
Zeta Zeta Fusion
Jio Payments Bank JioMoney Developers
Paytm Payments Bank Paytm Developer
Airtel Payments Bank Airtel Smart Api
RevolutRevolut Developer Portal
Note: The list is not exhaustive and is based on the publicly available data

Indian neobanks’ outlook

  1. A high mobile and internet penetration rate in addition to the largely unbanked population proves that India is a market ripe for neo banking.
  2. The new recommendations made by the Indian inter-ministerial panel on fintech to the Department of Financial Services and RBI to test new fintech innovations in a restricted ecosystem and to examine the benefits of granting full banking licences to banks while allowing them to operate completely online will boost the financial inclusion thrust in India.
  3. The sudden surge of neobanks in the Indian banking sector indicates that the market is lucrative for technology-based platforms, thus enabling superior user experience with the secondary infrastructure of a traditional bank to mitigate risk.
  4. Two scenarios will exist as the future of neobanks
    1. Firstly, neobanks will become the primary interface and a daily transactional bank for customers. Whereas traditional banks form the secondary interface and a long-term saving bank.
    2. Secondly, India will witness a consolidation of multiple small neobanks in a single super application with a targeted approach to each customer segment (Gen Z, millennials, businesses, rural, and agriculture).


Table 4: List of Indian neobanks’ investors
Name Investors
Fino Payments Bank BPCL, ICICI Bank
NiYo Horizons Ventures, Tencent Holdings, JS Capital, Social Capital, Prime Venture Partners
Open Speedinvest, Tiger Global Management, 3one4 Capital, Tanglin Venture Partners, BetterCapital AngelList syndicate, Unicorn India Ventures, BEENEXT, AngelList, ISME ACE, Recruit, Amrish Rau and Jitendra Gupta
RazorPay X Matrix partners, Tiger Global management, GMO Venture partners, Ribbit Capital, Sequoia Capital India, Mastercard and 33 angel investors
Yelo Omdiyar network, Matrix partners, Flourish ventures, Better capital
InstantPay Kaleden Holdings, RB Investments Pte. Ltd
Hylo Ram Rastogi, Murali Vemula, Venu Gopal, Raveen Sastry
Payzello GenNext Ventures, Axilor Ventures
Zeta Sodexo
Jupiter Bedrock capital, Hummingbird venture, Matrix partners, 3one4 capital, Greyhound capital, Global founders capital, Sequoia capital India
Finin PointOne Capital, Astir venture, Unicorn India Ventures
Namaste Credit Nexus Venture Partners
Walrus Raven Sastry, Brijesh Thakkar, Raghunandan G, Better Capital
Slice Better Capital, Gunosy, Das capital, Pegasus Wings Group Kunal Shah
Fi Sequoia capital India, Ribbit capital, Hillhouse Capital Group
NSDL Payments Bank India Alternatives Private Equity Fund
Paytm Payments Bank Vijay Shekhar Sharma – Lead investor
Airtel Payments Bank Bharti Airtel and Bharti Enterprises
Note: The list is not exhaustive and is based on the publicly available data
End notes

We have sourced information pertaining to the funding value, round, customer base, revenue, and product information from Crunchbase, Owler, respective company’s annual reports, and their websites.

Akshita Maruthavanan, Research Intern, contributed to this research by assisting in writing, conducting preliminary analysis and conceptualising the topic.

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