Reserve Bank of India (RBI) has issued a cease and desist order to several NBFCs, including DMI Finance and Navi Finserv, due to supervisory concerns related to their pricing policies.

Kolkata-based Arohan Financial Services Limited and Chennai-based Asirvad Micro Finance Limited have also been asked to stop lending.

The RBI found that these companies were charging excessive interest rates and failed to adhere to regulatory guidelines, leading to restrictions on loan disbursals starting from October 21, 2024​.

These companies also breached the Fair Practices Code, with further violations in household income assessment, loan repayment capacity, and asset classification. These were highlighted through both onsite inspections and offsite data analysis, the RBI said in a circular.

“Navi Finserv is currently reviewing the circular received from the RBI and is committed to addressing all concerns raised by the regulator promptly and effectively, prioritising what’s right for our customers. The company remains dedicated to maintaining the highest standards of compliance, transparency, and customer care in its operations,” a Navi Finserv spokesperson said.

The RBI is attempting to educate its regulated entities about the responsible use of their regulatory freedoms, including maintaining fair and reasonable pricing.

DMI Finance had recently acquired the troubled buy now pay later startup ZestMoney and has been under scrutiny for its pricing practices. Navi Finserv, on the other hand, recently completed a $24.5-million personal loan securitisation transaction with Goldman Sachs (India) Finance.

Last week, during the Monetary Policy Committee (MPC) meeting, RBI Governor Shaktikanta Das emphasised concerns about the aggressive growth strategies of some NBFCs and the potential risks they pose to financial stability.

He highlighted that while the overall health of the NBFC sector remains strong, certain outliers are pursuing unsustainable practices, such as high interest rates, excessive processing fees, and target-driven growth without sufficient risk management.

This has been particularly evident in microfinance loans, credit card debt, and unsecured consumption loans​ he said.

This move is part of the RBI’s broader strategy to ensure that NBFCs and MFIs operate within a framework that protects consumers, especially in the context of small-value loans. The RBI has been actively working to mitigate issues related to unfair lending practices in the microfinance sector, particularly in light of the recent trends observed during its regulatory reviews.

(The copy was updated with Navi’s response.)

Simplismart has secured $7 million in Series A funding round led by Accel, with participation from Shastra VC, Titan Capital, and high-profile angels, including Akshay Kothari, Co-founder of Notion. 

The new capital will be used to fuel the company’s R&D and growth for their enterprise-focused MLOps orchestration platform.

“Building generative AI applications is a core need for enterprises today. However, the adoption of generative AI is far behind the rate of new developments. It’s because enterprises struggle with four bottlenecks: lack of standardised workflows, high costs leading to poor ROI, data privacy, and the need to control and customise the system to avoid downtime and limits from other services,” said Amritanshu Jain, Co-founder and CEO, Simplismart. 

Founded by Amritanshu Jain and Devansh Ghatak in 2022, Simplismart is a cloud-based MLOps workflow orchestration platform that helps organisations fine-tune, deploy, and observe models at scale. 

In the span of two years and with less than $1 million in initial funding, Simplismart claims to have outperformed public benchmarks by developing the world’s fastest inference engine. This engine enables organisations to execute machine learning models at speed, enhancing performance while reducing costs. 

“As GenAI undergoes its Cambrian explosion moment, developers are starting to realise that customising & deploying open-source models on their infrastructure carries significant merit; it unlocks control over performance, costs, customizability over proprietary data, flexibility in the backend stack, and high levels of privacy/security. Not only did Simplismart identify this opportunity early, but with a small team, they have already begun serving some of India’s fastest-growing AI-powered companies in production,” said Anand Daniel, Partner at Accel. 

For instance, its software-based optimisations allow Google‘s AI model Llama3.1 (8B) to operate at a rate of over 440 tokens per second. 

Unlike many competitors who prioritise hardware enhancements or cloud solutions, Simplismart has achieved this improvement through a MLOps platform designed specifically for on-premises enterprise environments and agnostic towards choice of model and cloud platform. 

At TechSparks 2024 in Bengaluru, a masterclass on ‘Leveraging FinOps for Success: A Guide for Startups and VCs’ shed light on a crucial yet often overlooked aspect of startup operations. Led by Satyam Santosh, Startup Program Lead – APAC at OVHcloud, and DVS Shiv Kumar, Solutions Architect at OVHcloud, the session provided invaluable insights into managing cloud costs effectively.

The importance of FinOps for startups cannot be overstated. As Santosh pointed out, “Startups really need to understand, especially early-stage startups when you have a dearth of money in your bank account. You need to look at cloud costs and understand how you should be able to control the costs that you’re incurring on your infrastructure.”

The masterclass began with a startling revelation: companies often overspend on their cloud budgets by 26%. This statistic underscores the critical need for startups to adopt FinOps strategies from the outset. FinOps, or Financial Operations, involves understanding and optimising cloud costs to ensure financial efficiency and accountability.

Kumar explained the core of FinOps: “The first step in FinOps is to identify and understand all cloud costs and services being consumed. Are these services that I am consuming really needed for my application, or can I optimise it further?”

Common pitfalls for startups

Both Santosh and Kumar highlighted several key pitfalls that startups often encounter:

• Hidden Costs: While direct costs like subscription fees and implementation are obvious, hidden costs such as bandwidth, data transfer, and vendor lock-in can significantly impact a startup’s budget.
• Data Transfer Costs: These can escalate quickly, especially for startups dealing with large amounts of data. The speakers recommended using tools like Cloud Easier to estimate these costs before deployment.
• Storage Costs: With the increasing amount of data being stored, any operation performed on this data can significantly affect cloud costs. Tools were suggested to help startups estimate and optimise storage costs.
• Vendor Lock-in: This was emphasised as a major concern. Santosh shared a cautionary tale: “We have a fantastic example from one of our startups from the France ecosystem. It was an edtech company… It actually lost the deal with the French government because the kind of code and architecture it had was so deeply ingrained in the cloud service provider it was using.”

Strategies for success

To avoid these pitfalls, the masterclass offered several key strategies. First, startups should integrate FinOps responsibilities into existing teams rather than creating a separate department, ensuring a more holistic approach to cost management. Simultaneously, creating a culture of cost awareness is crucial, with employees trained to be accountable for the services they use.

The speakers emphasised the importance of adopting cost optimisation tools like Cloud Easier, Cloud Mercato, and Harley to compare providers and optimise costs effectively. They also stressed the need to optimise cloud usage by right-sizing instances and leveraging reserved instances to mitigate high computing costs.

Finally, implementing chargeback processes to map cloud bills to different departments was recommended to ensure financial accountability across the organisation.

Leveraging cloud provider benefits

The speakers also emphasised the importance of avoiding over-reliance on managed services and adopting open standards to maintain flexibility and avoid vendor lock-in.

Interestingly, the masterclass highlighted how some cloud providers, like OVHcloud, offer free bandwidth, which can significantly reduce monthly costs. “There are very few cloud services in the market that actually give you totally free bandwidth,” Santosh noted, emphasising how this can lead to more predictable monthly bills.

The session concluded with advice for startups to leverage the benefits available through cloud service provider startup programs. These programs often provide credits, technical support, and even access to funding opportunities, which can be crucial for early-stage startups managing cloud costs.

In an era where cloud services are integral to most startups, mastering FinOps is no longer optional—it’s a necessity. As this masterclass at TechSparks 2024 demonstrated, understanding and implementing FinOps strategies can be the difference between a startup that struggles with unexpected costs and one that scales efficiently and attracts investment. For founders and VCs alike, the message is clear: FinOps is a critical component of startup success in the cloud-first world.

Watch the full video here.