After Ola, online used car marketplace Cars24 applies for NBFC licence

India’s burgeoning financial services sector has become an attractive prospect for even non-financial firms. Startups, whose core businesses have nothing to do with financial services, are after early scale entering the financial services game and sell financial products such as loans, credit cards, and insurance.

Two days ago, home-grown cab hailing major Ola had applied for a non-banking finance company (NBFC) licence. Now Cars24, an online marketplace for buying and selling used cars has applied to the Reserve Bank of India (RBI) for an NBFC licence.

The Gurugram-based firm plans to start separate financing business under the Cars24 umbrella.

In order to expand its business, the company intends to offer vehicle loans. When a consumer buys the vehicle from the dealer we can be the financing platform for them, CEO Vikram Chopra quoted as saying by ET report.

Cars24 buys used vehicles from owners and sells them to dealers, fulfilling the end-to-end transaction. The firm earns revenue through a commission of about 4-5 per cent from each transaction. Three years old firm claims to have sold over 100k cars.

In 2018, venture capital firm Sequoia Capital India had led around Rs 340 crore round in Cars24.

According to industry experts, lending is the next big thing in the business. At the same time they said, financial service is a difficult segment to crack.

E-commerce players Amazon, Flipkart and Xiaomi all have earlier applied for NBFC licenses. Will all these firms, primarily non-core financial firms, be able to run financial services independently on its own? The question remains.