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Purple Finance eyes SFB license by 2028
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Published in Business and Finance on Monday, November 3rd 2025 at 9:06 GMT by The Financial Express- 🞛 This publication is a summary or evaluation of another publication
- 🞛 This publication contains editorial commentary or bias from the source
From digital lender to full‑stack bank
Founded in 2020, Purple Finance began as a data‑driven platform that aggregates non‑bank data sources – such as e‑commerce transaction histories, utility bill payments and social media metrics – to build a credit score for borrowers that traditional banks often overlook. Leveraging machine‑learning models and a proprietary risk‑scoring engine, Purple Finance has successfully disbursed more than INR 10 billion in loans to over 1.5 million SME clients across India’s tier‑2 and tier‑3 cities. The company’s “Purple Pay” wallet has also allowed borrowers to make instant repayments, further cementing its position as a one‑stop financial solution for small businesses.
The company’s leadership believes that a Small Finance Bank licence will unlock a host of new services that go beyond lending. By 2028, Purple Finance plans to offer deposit products, savings accounts, payment‑gateway services and even digital wealth products. “The SFB licence is not just a regulatory flag; it is a strategic lever that will allow us to deepen our customer relationships, diversify revenue streams and scale our technology platform to handle millions of transactions each day,” said CEO Shivam Gupta in the interview.
Funding and growth trajectory
Purple Finance’s rapid growth has been underpinned by a series of successful funding rounds. In 2022, the firm raised $30 million in a Series A round led by SoftBank Vision Fund, followed by a $70 million Series B round in 2023 that included participation from Bessemer Venture Partners and Goldman Sachs. These infusions have allowed the company to bolster its loan portfolio, expand its field‑sales force and build out its core technology stack.
“Capital is a key component of our SFB strategy,” explained Gupta. “The RBI’s guidelines for SFBs require a minimum paid‑up equity of INR 200 crore and a net worth of INR 500 crore. We are well on track to meet these thresholds by 2025, thanks to our conservative risk model and strong profitability metrics.”
The company’s financials are impressive by fintech standards. In FY 2024, Purple Finance reported a net interest margin of 13.5 % on its loan book and a gross NPA ratio of just 2.1 %. Profitability has steadily improved, with a 25 % year‑on‑year increase in EBITDA.
Regulatory landscape and the RBI’s SFB roadmap
The RBI’s decision to open up the Small Finance Bank segment in 2020 created a new regulatory framework that allows non‑bank financial companies to transition into fully licensed banks. The guidelines, released in 2023, set out capital, governance, and operational requirements that companies must meet. In addition, the RBI is encouraging fintechs that already have a strong digital presence to apply for SFB licences as part of its “Banking for All” initiative.
Purple Finance’s compliance team has been actively engaging with RBI officials to map out the compliance roadmap. “We’ve already conducted an internal audit of our KYC processes, data security protocols and audit trail mechanisms. We’re confident that we can meet the RBI’s governance and risk‑management standards by mid‑2024,” said Gupta.
The company is also leveraging its partnership with the National Payments Corporation of India (NPCI) to integrate instant payments into its platform. The partnership, announced in 2023, will allow Purple Finance’s customers to receive loan disbursements directly into their Unified Payments Interface (UPI) accounts, streamlining the customer journey and reducing friction.
Strategic partnerships and ecosystem integration
Beyond regulatory readiness, Purple Finance’s business model relies heavily on a robust ecosystem of partners. The firm has formal agreements with over 150 micro‑finance institutions (MFIs), 25 e‑commerce platforms and 12 state‑run banks. These alliances provide Purple Finance with access to a wider borrower base, diversified collateral pools and additional distribution channels.
One notable partnership is with the e‑commerce giant Flipkart, which allows Purple Finance to offer instant “buy‑now‑pay‑later” (BNPL) financing to Flipkart’s small‑business merchants. The partnership, which was announced in early 2024, has already resulted in a 30 % increase in loan applications from Flipkart’s seller community.
The company is also working with the Government of India’s Ministry of Micro, Small and Medium Enterprises (MSME) to integrate its platform into the “Pradhan Mantri Mudra Yojana” (PMMY) program, a government‑backed initiative aimed at providing credit to underserved SMEs. The collaboration is expected to unlock additional government guarantees, further reducing the risk profile of Purple Finance’s loan book.
Challenges on the road to licensing
While the path to an SFB licence is promising, it is not without hurdles. Purple Finance’s biggest challenge remains the capital requirement. Although the company is on track to meet the RBI’s minimum equity threshold, the cost of raising additional capital can be high, especially in a market where the valuation of fintechs has been somewhat volatile. In addition, the company must demonstrate a robust risk‑management framework that meets the RBI’s stringent prudential norms.
Another potential challenge lies in scaling the company’s technology platform to handle the increased transaction volume that a full‑bank licence would bring. Purple Finance’s cloud‑based architecture is designed to scale, but the company must also invest in data governance, cyber‑security and compliance systems to meet banking‑grade standards.
Finally, competition is intensifying. Traditional banks and new fintech entrants are aggressively pursuing SFB licences, creating a crowded marketplace. Purple Finance must differentiate itself through superior customer experience, innovative product offerings and a strong brand identity.
Outlook and next steps
Despite the challenges, Purple Finance’s leadership remains optimistic. The company has already submitted its preliminary application to the RBI, and the regulatory review process is expected to take 18–24 months. In the interim, Purple Finance plans to focus on expanding its loan book in the industrial and retail sectors, deepening its partnership with the government, and strengthening its risk‑management framework.
“Our goal is not just to get a licence; it’s to become the most customer‑centric, technology‑driven small‑finance bank in India,” said Gupta. “We are excited about the opportunity to serve millions of SMEs, create jobs, and contribute to inclusive growth.”
As India’s fintech sector continues to evolve, Purple Finance’s journey from a digital lender to a full‑stack small‑finance bank will serve as a barometer for the broader trend of fintechs transitioning into regulated banks. With a solid business model, robust funding base and a clear regulatory roadmap, the company appears well positioned to hit its 2028 target, potentially reshaping the future of SME finance in the country.
Read the Full The Financial Express Article at:
[ https://www.financialexpress.com/business/banking-finance-purple-finance-eyes-sfb-license-by-2028-4030716/ ]
