BENGALURU: Whether you live in a metro or tier II towns, a Swiggy order on a Sunday or buying veggies through Google Pay and Paytm is now a part of the common routine. But imagine, if you could also get a loan for a medical emergency or for paying utility bills based on your transaction histories!
A lot of digital lending apps are now targeting the millennials, neighbourhood vendors, household helps and daily wage workers to lend small ticket loans after assessing their transactions history.
These start-ups are collaborating with banks and non-banking financial institutions (NBFCs) for accessing capital and then reaching out to customers through platforms like aggregators or e-commerce sites.
Even as traditional lenders, including banks, are still the leading financial service providers in the country, the Reserve Bank of India has also underlined the significance of digital lenders, especially those catering to individuals with no credible credit history or cannot give underwritings.
Recently, India’s Aadhar architect and Infosys’ non-executive Chairman Nandan Nilekani said during a fintech summit that the digital landscape for financial services needs to evolve fast, particularly leveraging the data and to be able to lend loans to the population not typically covered by the traditional lenders.
Subscribing to the above theory, Pradeep Rathnam, founder and chief executive officer (CEO) of TERA Finlabs based in Bengaluru told this publication that his company is collaborating with various tech platforms to source data as well as look for possible customers they can target to avail loans.
“These are really small-ticket size loans meant for anyone who has, for instance, a monthly salary of Rs 10,000 and above, but cannot seek the financial assistance from banks because of simply being not eligible or going through the lengthy process,” explained Rathnam. However, a digital lender simply looks at if the same person is digitally active — either having onboarded a platform or transacting digitally — for providing loans, Rathnam added.
According to him, the process is not as cumbersome as with the traditional lenders and disbursals are also done in no time.Digital lending market is estimated to grow 3x by FY22.
Big opportunity in tapping biz underserved by banks
Our estimates suggest tapping small businesses and the $300 billion unorganised lending market will give a huge opportunity to digital lenders, said Abhishek Chauhan, Head Consulting, India at Redseer.