ZestMoney, a buy-now-pay-later (BNPL) platform backed by Goldman Sachs, is reportedly laying off around 30% of its workforce after PhonePe canceled its plan to acquire the company. While PhonePe is expected to onboard a significant portion of ZestMoney’s workforce, the rest will be laid off. The founders and top leadership of ZestMoney informed the employees about the layoffs in a town hall meeting on Thursday. The layoffs come about a week after PhonePe pulled the plug on the deal to acquire ZestMoney, citing due-diligence issues, disagreements over valuation, sustainability of the business, and the shareholding structure as key reasons.
The Reserve Bank of India (RBI) has been actively taking measures to regulate the digital lending space in India. In June 2021, the RBI banned non-bank institutions from loading prepaid payment instruments (PPIs) with credit lines. Additionally, in December 2021, the RBI issued guidelines for digital lending platforms to prevent unethical practices such as charging exorbitant interest rates, misusing customer data, and using coercive methods to recover dues. These guidelines require digital lending platforms to adhere to certain transparency and disclosure norms, and also mandate a cooling-off period before disbursing loans. It seems like ZestMoney is a Bangalore-based fintech startup that was founded in 2015 by Lizzie Chapman, Priya Sharma, and Ashish Anantharaman. The company provides buy-now-pay-later (BNPL) services to customers, enabling them to pay for their purchases in three installments at 0% interest rate.