Xiaomi has quietly shut down its financial services in India less than three years after the launch of payment and lending apps in the major global market, two sources familiar with the matter told londonbusinessblog.com, pulling back from what analysts say is a probability of $1 trillion.
The Chinese giant recently pulled Mi Pay and Mi Credit apps in the country from the local Play Store and its own app store. Mi Pay, which allowed users to transact on the country’s UPI payment network, is also no longer listed as one of the recognized UPI apps by NPCI, a trade association that oversees UPI.
Xiaomi and NPCI did not respond to a request for comment.
The abrupt phasing out of financial services is a setback for Xiaomi India, which dominates the smartphone market in the country and has aggressively expanded its offerings to boost profits as the company’s hardware business operates on paper-thin margins.
Xiaomi launched Mi Pay in India in March 2019. The app itself had more than 20 million registered users in the country that year, company executives said at the time.
Later in the year, the company launched Mi Credit, an app that loaned customers between $70 and $1,400 at low interest rates. It used texts and call logs from users to search transaction information and some other details to determine their creditworthiness and approved loans to them through partners in a matter of minutes.
Last August, Manu Jain, the then head of Xiaomi India, told media that the company aspired to become one of the biggest players in India’s fintech space through Mi Credit and Mi Pay apps. The company considered India to be the largest market for Mi Credit after China, he said.
Numerous giants, including Facebook and Google, have entered the Indian digital lending market, offering small business loans through partners. According to estimates from the Boston Consulting Group, digital loans are expected to be worth $1 trillion by 2025.
Jain, who has since transitioned to another role within the company, said last year that the company was looking to expand its financial services, including gold loans, credit cards and insurance in the South Asian market.
It’s unclear why Xiaomi has halted the provision of financial services in the country, but the move comes at a time when India’s central bank has proposed strict rules regarding loans in India, mandating what data they can access on a customer’s phone and wider disclosures about the terms of their credit agreement.
Xiaomi has also been at the center of intense scrutiny by the Indian government agencies. India’s Enforcement Directorate seized bank accounts of Xiaomi India earlier this year after finding that the company had transferred $725 million to three foreign-based entities “under the guise of royalties”.
Xiaomi executives, who have refuted the allegations and have legally challenged the ruling, were threatened with “physical violence” during their investigation with the ED, Reuters previously reported.