Xiaomi Shuts Down Its Fintech Business in India Amidst Scrutiny From Government; Know Details

Xiaomi India has quietly discontinued its financial services in the country. It has taken this move in less than three years of launching its payment and lending apps -- Mi Pay and Mi Credit in India, which is a key global market. As per analysts, the company has retreated from its $1 trillion opportunity in the Indian market.

As per a report by TechCrunch citing sources familiar with this development, the Chinese giant has pulled the Mi Pay and Mi Credit apps from the local Play Store and its own app store in the country. This report has surfaced amidst a crackdown by the Enforcement Directorate where the Indian government froze the company's assets worth $676 million.

Xiaomi India Winds Down Financial Services

As a result of this abrupt wind down of Xiaomi's financial services business in India, the Mi Pay app that was used to make transactions on the UPI network is no longer listed by NPCI, which oversees UPI. This move could be a setback for the company in India, which is one of its key global smartphone markets. In recent years, Xiaomi has been expanding its offerings in the country to increase its profits as the hardware business involved thin margins.

Notably, Xiaomi launched the Mi Pay service in 2019 and had over 20 million registered users in the country as of 2021. Later in the same year, it also launched the Mi Credit app, which lent between $70 and $1,400 at low-interest rates. Last year, the company's India head Manu Jain stated that they aim to become one of the largest players in the fintech space in the country.

Why This Move?

As of now, there is no clarity from Xiaomi on why it decided to discontinue its financial services in India. However, it comes at a time when India's central bank, the Reserve Bank of India (RBI) has imposed stringent rules when it comes to lending in the country. Xiaomi was also subject to intense scrutiny from government agencies.

The Indian Enforcement Directorate seized the bank accounts of Xiaomi India after finding that it had remitted $725 million to three foreign entities as royalty payments. However, executives of the company refuted these charges and legally challenged the proceedings.

Amidst these issues, the company's discontinuation of its financial services has raised speculations on its future in India. As it possesses a strong command of the smartphone arena in the country, we will have to wait for more clarity from Xiaomi.