Financial Inclusion led by 5Ds of Digital Lending

The Rise of Retail Loans

The Indian lending market grew to 174.3 lakh crore in March 2022, up by 11.1% in March 2021, driven primarily by high value commercial and retail lending. Over the last few years, individuals have turned to various non-banking financial companies (NBFCs), fintechs and their digital lending platforms for faster credit, as compared to banks. These lenders have shown a preference for a large number of retail loans since these have a smaller risk of default as compared to high-value corporate loans. Pay cuts/ layoffs during the pandemic and the post-pandemic rising cost of inflation have further necessitated the financing of personal needs through loans. Even in the midst of the global gloom of an impending recession, banks in India witnessed a surge in consumer demand across segments last quarter, as India geared up for full-fledged festive season celebrations after two and a half years. 

The Role of Digital Lending in Credit Expansion

New age NBFCs and fintechs lending through digital platforms have been able to address consumer demand by providing hassle-free and faster credit, especially for new-to-credit (NTC) or underserved sectors. The availability of real-time and reliable data on borrowers, fuelled by increased mobile internet penetration, has been a major contributor to digital lending in India. Lockdowns and restrictions on social contact during the pandemic promoted further adoption of digital credit, even in tier 2 and tier 3 cities. Traditional banks and NBFCs, too, are jumping on the bandwagon of digital lending either through their native applications or partnering with fintechs. This can be ascertained by a survey conducted by RBI of representative Banks and NBFCs indicating a twelve-fold growth in digital lending volumes between 2017 and 2020, driven majorly by personal loans. 

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Tips to Prevent Festive Season Fraud

October is a great time to be in India because it is the start of the festive season.

Indian consumers have expressed a strong desire to buy more discretionary products during the festive season while coming out of the pandemic, according to Deloitte’s Global State of Consumer Tracker.

‘Buy Now, Pay Later’ (BNPL), Digital credit line and e-wallet offerings appear to be the rage this festive season, with several e-commerce sites, banks, and merchants offering such deals. Even without a credit history, a substantial number of borrowers can now take advantage of BNPL’s short-term credit. Many of us have had to tighten our wallets as a result of the Covid-19 outbreak and weak global economic scenario making BNPL programs even more appealing.

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Digital safety – Insurtech is the key!

In India, the citizens have not fully explored insurance. As per Government and industry analysis, 75% of the Indian population doesn’t have any kind of insurance. Awareness and also reach, being a loophole in the insurance products being offered is the strong catch point for what is evolving rapidly now. Insurtech in India has created a drastic change in the way people access insurance products.

Insurance covers various aspects like life, travel, health etc.

Technology steps in here. It makes the services reachable and educates the untapped customers through seamless customer experience.

Insurtech is a combination of insurance and technology along with a whole lot of Innovation. It is here to change the scenario of Insurance in India.

Insurtech companies in India

There are many Insurtech players in India like, Acko General Insurance, which is the winner of  Excellence in InsureTech category at India FinTech Awards’ 20, Digit Insurance, Toffee Insurance, PolicyBazaar, CoverFox, Paytm Insurance, GramCover etc.

Toffee Insurance is one of the unique Insure-tech startups which provides a wide variety of products like Backpack, Cyclist, Dengue, Mosquito and Daily Cash plan to name a few. The CEO and Co-Founder, Rohan Kumar, speaks about insurance and the COVID-19 situation in a talk with our fintech ambassador.

Mr. Rohan Kumar, CEO and Co-Founder at Toffee Insurance

The new normal for Mr. Rohan is that COVID has cut down the noise in the organization and made people more empathetic post COVID.

However, prior to the pandemic, insurance has been a tough market according to Mr. Rohan. Firstly, people didn’t recognize the need to have an insurance cover. Secondly, liquidity, awareness, education and access are the parameters that affect when buying insurance.

Toffee Insurance was started with the goal to try to create accessibility, affordability and relevance of insurance products and make simpler and easier products that make people understand.

Watch the full exclusive interview here.