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Groww Obtains Payment Aggregator License, Expands Financial Services Portfolio

SUMMARY

Fintech unicorn Groww received a PA license from RBI for its bill payment platform Groww Pay. This allows them to act as a one-stop shop for financial needs, acquiring merchants and offering digital payment solutions. Groww has been expanding its offerings beyond investment tech (stocks, ETFs, IPOs) by entering mutual funds (acquiring Indiabulls Housing Finance's business) and launching its own Nifty index fund. They also offer UPI payments, bill payments, and lending services through an NBFC license. Groww's parent company turned profitable in FY23.

This PA license is part of a trend by RBI to expand the pool of PA license holders in 2024. Other companies like Amazon Pay, JusPay, Stripe, and Tata Payments have also received licenses. This signifies a growing focus on digital payment acceptance solutions in India.

Fintech unicorn Groww has secured a significant milestone with the Reserve Bank of India (RBI) granting its bill payments platform, Groww Pay Services, a payment aggregator (PA) license. This authorization empowers Groww to become a more comprehensive financial services provider.

From Investment Tech to Full-Fledged Financial Institution

Founded in 2017, Groww initially focused on investment technology, allowing users to trade stocks, ETFs, and participate in IPOs. Recognizing the need for a more holistic financial experience, Groww has been steadily expanding its offerings.

Mutual Fund Entry: In 2023, Groww acquired Indiabulls Housing Finance's mutual fund business for INR 175.6 Cr, marking its entry into the mutual fund space.

Nifty Index Fund Launch: Last week, Groww received approval from SEBI to launch India's first Nifty non-cyclical consumer index fund. This new fund offering (NFO) is expected to launch in May 2024.

UPI Integration: Groww introduced UPI payments functionality on its app in July 2023, leveraging its TPAP license from NPCI. This enables users to make bill payments, including electricity, water, loan, and credit card repayments.

Lending Services: Groww further diversified by acquiring an NBFC license through Groww Creditserv Technologies in late 2022, venturing into the lending space.

Financial Performance and Growth

These strategic expansions have yielded positive results. Billionbrains Garage Private Limited, Groww's parent company, achieved profitability in FY23, reporting a net profit of INR 448.7 Cr, a significant turnaround from its net loss of INR 239 Cr in the previous year. Operating revenue also witnessed impressive growth, tripling from INR 351 Cr to INR 1,277.8 Cr during the same period.

RBI's Focus on PA Licenses

The RBI has actively expanded its pool of PA license holders in 2024. Companies like Innoviti, Concerto Software and Systems, Amazon Pay, JusPay, Stripe, Tata Payments, and Mswipe have all received their licenses this year. Additionally, prominent players like Cred, PayU, and Khatabook hold in-principle authorizations from the RBI for PA operations.

Groww's Future Prospects

The PA license empowers Groww to acquire merchants and offer digital payment acceptance solutions. This, combined with its existing services, positions Groww to become a one-stop shop for a wide range of financial needs. With its focus on innovation, strategic acquisitions, and a rapidly growing user base, Groww is well-positioned to play a significant role in India's evolving financial landscape.