Food delivery behemoth, Zomato, is rekindling its lending aspirations, liaising with multiple non-banking financial companies (NBFCs) to offer working capital loans to its partner restaurants, Moneycontrol reported.

What Happened: Zomato is revisiting its lending plans after a hiatus. The firm is negotiating with several NBFCs to extend working capital loans to its partner eateries. As part of the agreement, Zomato will also operate as a Loan Service Provider (LSP).

In its capacity as an LSP, Zomato will procure loans from its associates and distribute the funds to potential borrowers, earning a fee based on its agreement with the lender. This could imply that Zomato will handle collections from the end-users.

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Zomato has been developing this initiative for a while and may make an announcement in the upcoming quarter, the report added citing sources. In February, Zomato recruited Akshay Gautam from Indifi Technologies, its former lending partner, as Assistant Vice President (AVP) to spearhead the initiative.

Zomato had commenced lending with partners during the pandemic in 2021 but halted because they aimed to provide loans through their own NBFC license, which is yet to be approved. Nevertheless, the firm has chosen to restart this under a partnership model.

Why It Matters: Zomato’s decision to revive its lending plans comes after the company withdrew its application for a payment aggregator license earlier in May 2024. Zomato Payments, a wholly owned subsidiary of Zomato, voluntarily relinquished its authorisation to function as an online payment aggregator, citing changes in the payments landscape in India and increased regulatory scrutiny. The company’s renewed focus on lending could be seen as a strategic move to diversify its financial services offerings in light of these developments.

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