The Indian digital loan market has evolved as a fertile platform for firms like Facebook, Alphabet Inc, Prosus NV, Amazon, and Xiaomi Corp. The market boasts to have a potential of about $1 trillion in value.
The Indian digital loan sector gets attention from top international companies
Facebook stated in August, that India would be the foremost nation where the small business loan programs will serve borrowings, through a partner, to companies that indulge in advertising on its portal. The array of Digital loans will spread from an INR 500,000 ($6,851) range to INR 5,000,000 ($68,515) range with 17%-20% interest rates. These loans will potentially be delivered without the expectation of providing collateral.
The social media mogul’s venture into the Indian subcontinent intersects with Xiaomi’s incursion into the nation. Xiaomi is China’s producer of a plethora of products and services, namely – rice cookers, gaming monitors, loan lending, credit cards provider, insurance, mobile phones, etc. The Chinese maker brags partnerships with some of the country’s most renowned banks and digital lenders.
On 31st August 2021, Prosus NV (a Dutch internet-based service provider) stated that it approved to acquire BillDesk, an Indian online payments service, for a whopping $4.7 billion. This is the biggest global acquisition to date, in the subcontinent.
PayU, a fintech division of Prosus NV, closed a deal to purchase BillDesk and boosted the digital payment goliath’s comprehensive worth to $147 billion. Thus, Prosus’ Indian investment multiplied to over $10 billion.
Amazon.com has also made its initial investment in the Indian domain of wealth management in August. It participated in a $40 million investment round by Smallcase Technologies Pvt. Ltd, an Indian fintech startup.
Alphabet Inc.’s Google has been investing in the country’s market for quite some time. Its popular and mass-approved Google Pay portal offers an array of wealth management products like digital gold and mutual funds. This platform now collaborates with many small-time Indian lenders for opening time deposits for its consumers.
The Indian digital loan sector
The digital payment sector in India is receiving consideration from several big tech companies post a surge in online transactions during the COVID19 pandemic. Traditional lenders became vigilant after they witnessed a surge in bad debt.
Sanctioning of digital loans is estimated to boom to $350 billion by 2023. It is expected to reach the peaking benchmark of $1 trillion by 2024, according to the approximations made by the Boston Consulting Group (BCG).
Saurabh Tripathi, the Managing Director & Senior Partner at BCG, stated that the payment industry could never make money like it does if it were not for its lending business. He indicated that Indian consumers were eager for more precisely fabricated digital experiences. The fabrication of such a device would only allow leading players to jump at such an esteemed opportunity of making good business.
However, like any other business sector or industry, The loan market comes with risks. Despite its significance, the loan ratio is estimated to surge to 11.3% by March 2022. This estimation indicates that the subcontinent will be one of the worst players among major nations for a second successive year.
The Reserve Bank of India (RBI) 🇮🇳 has been looking into loan collections by digitally run companies. The Reserve Bank is also brainstorming techniques to regulate online lenders. Presently, the Indian market has witnessed more than three hundred startups that provide online loan facilities.