Online or digital onboarding for obtaining loans in India is expected to increase to 55-75% of total loan payout by 2025, according to the Akhil Handa, Head of Fintech, Partnerships and Mobile Banking and Digital Lending Department, Bank of Baroda.
Handa announced that between 2015 and 2020, around 20% of loan disbursements or new loans were technology-driven. Online lending has proven successful in retail and has also proven successful in lending to small businesses, claims Handa.
“In the next phase of digital lending between 2020 and 2025, it will go beyond Cities I and II. By 2025, an estimated 55 to 75% of the loans booked will be digital in nature. ”
His comments reportedly came during a recent webinar held by the Indian Chamber of Commerce. As covered According to local news agency The Week, out of around 75 million (micro, small and medium-sized enterprises) MSMEs in India, only 18 million use digital platforms. However, that should change over the next five years as more companies are expected to adopt digital transformation strategies, which is a major fintech trend accelerated by COVID-19, Handa said.
Infrastructure enablers, including digital land registers, online account aggregators and the Open Credit Enablement Network (OCEN), which is used to connect lenders and marketplaces, will all play a key role in transforming India’s lending business, Handa said.
Fintech acceptance of Indian companies grew 100% over the past year, according to KM Nanaiah, MD at Equifax Credit Information Services. Fintech service providers and traditional banks as well as non-bank financial firms (NBFCs) have all played an important role in supporting India’s digital lending sector.
Earlier this month, India’s digital credit fintech launched RevFin in partnership with EVI Technologies to offer funding to e-rickshaw users.
The introduction of fintech in India will be lead to more contactless and digital payments, but cybersecurity risks need to be addressed, an industry manager recently stated. The Reserve Bank of India is working on Enable digital offline payments to help rural consumers get into the formal economy.