Klarna wants to be its own bank
On July 6, Klarna filed applications with the Utah Department of Financial Institutions and the FDIC to charter Klarna Bank USA, a Utah industrial bank that would sit as a wholly owned subsidiary of Klarna Inc. Gary Harding has been named to lead it if approved, with its own board and internal controls separate from the parent company.
The filing is not cosmetic. Klarna currently reaches US customers through partner banks, most recently WebBank for its debit card and high-yield savings products, after previously working with Cross River Bank. Those partnerships cost money: partner banks take a cut of revenue and add a layer of operational complexity that becomes more expensive as interest rates rise. A charter would let Klarna fund loans directly from customer deposits, cutting out the intermediary and bringing payments, lending and merchant settlement in-house.
That is also exactly why the application will not sail through. Klarna is applying for an industrial loan company, or ILC, charter rather than a standard bank charter, a route that lets a commercial parent hold a bank subsidiary without the consolidated Federal Reserve oversight that comes with a bank holding company structure. The Independent Community Bankers of America has spent the past year pushing the FDIC to reinstate a moratorium on ILC deposit insurance approvals, and in April it asked the agency to reconsider its own approval of an ILC for Edward Jones on the grounds that the brokerage's branch network could function as informal deposit-gathering infrastructure. The Bank Policy Institute has made the same argument in comment letters: that the ILC path lets non-bank companies get deposit insurance while avoiding the supervision a bank holding company would face.
Klarna is not alone in the queue. Reporting since the filing has noted that Affirm, PayPal and Upstart, among others, have industrial bank or trust charter applications pending or recently approved, all chasing the same prize of funding loans with their own deposits instead of a partner bank's balance sheet. Regulators have historically taken more than a year to rule on ILC applications, and the bank lobby has contested nearly every one since Square's charter cleared in 2020. Whatever the FDIC decides on Klarna will shape how the rest of that queue gets treated.
India narrows who counts as an NBFC it watches closely
While US regulators argue over who should be allowed to look like a bank, the Reserve Bank of India spent the first half of 2026 doing the opposite: deciding which non-bank lenders it needs to watch closely at all.
The RBI's Non-Banking Financial Companies (Registration, Exemptions and Framework for Scale Based Regulation) Amendment Directions, 2026, notified April 29 under reference RBI/2026-27/43, took effect July 1. The directions create a formal "Type I NBFC" category for entities that do not access public funds and have no direct customer interface, typically group treasury or captive financing arms. Type I NBFCs with assets under ₹1,000 crore can now operate as "Unregistered Type I NBFCs," exempt from holding an RBI certificate of registration altogether, provided an auditor certifies they take no public funds and touch no retail customers. Already-registered entities that meet the criteria can apply through the RBI's PRAVAAH portal, using a revised form the central bank published on June 30, to deregister by December 31.
Cross the ₹1,000 crore asset threshold, though, and the light-touch treatment ends. A Type I NBFC that grows past that line has to register formally, and any NBFC that raises funds from the public, accepts deposits where permitted, or deals directly with retail borrowers is classified as Type II and stays under full supervisory scope regardless of size.
The practical effect is a cleaner split between NBFCs that pose systemic or consumer risk and those that are essentially internal financing vehicles with no public exposure. For the smaller captive lenders that qualify, it removes a registration and compliance burden that was arguably disproportionate to the risk they carried. For everyone else, meaning any NBFC that touches deposits or retail customers, nothing about supervisory intensity has changed. The RBI has been public about wanting scale-based, risk-proportionate regulation rather than a single rulebook for a sector that ranges from housing finance giants to single-branch gold loan companies, and this amendment is the registration-side piece of that project.
Two different regulatory instincts, one shared question
The two developments sit on opposite sides of the same underlying question: how much banking-like activity should a non-bank company be allowed to do before regulators treat it as a bank. Klarna's filing is a fintech asking to be let further into the banking perimeter, on terms that avoid the heaviest layer of consolidated oversight. The RBI amendment is a supervisor pulling the perimeter tighter around entities that genuinely touch the public while relaxing it for those that do not.
Neither outcome is settled. The FDIC has not ruled on Klarna Bank USA, and ILC applications from Affirm, PayPal and Upstart sit in the same queue awaiting the same scrutiny. In India, NBFCs now have until the end of the year to decide whether deregistration under the new framework makes sense for them. Both processes will take months to resolve, and both will shape how much of consumer lending in each market ends up funded through a chartered balance sheet versus a partner bank or a lightly supervised financing arm.