New data analytics are improving how credit is assessed
Alternative lending adoption in India is expected to grow steadily over the forecast period, recording a CAGR of 17.7% during 2024-2028, increasing from US$7.53 billion in 2023 to reach US$18.24 billion by 2028.
“Medium to long term growth story of alternative lending in India remains strong,” said a report being offered by ResearchAndMarkets.com since 29 Oct.
It is expected to grow by 26.3% on an annual basis to reach US$9.51 billion in 2024, says a report, “India Alternative Lending Market Business and Investment Opportunities Databook – 75+ KPIs on Alternative Lending Market Size, By End User, By Finance Model, By Payment Instrument, By Loan Type and Demographics – Q2 2024 Update”.
Alternative lending in India has shown robust growth, driven by increased digital adoption and the need for accessible credit among underserved segments.
The financial sector is expected to grow in the next few months, especially in areas such as peer-to-peer lending and financial technology solutions. New data analytics are improving how credit is assessed and making it easier for small businesses and individuals to get financing.
Even though there are challenges related to funding and market conditions, alternative lending remains an important part of India’s changing financial landscape.
In India’s alternative lending sector, Jar has launched digital lending services through partnerships with Liquiloans and other non-banking financial institutions to address credit needs in underserved markets.
PhonePe is seeking an NBFC license to diversify its offerings, while Jupiter, a neo-banking platform, has successfully obtained such a license to provide lending products. This reflects the trend of fintech companies expanding into alternative lending space.
Jar’s Partnerships with NBFCs – Jar, a savings startup backed by Tiger Global, has entered the digital lending space through partnerships with Liquiloans and other NBFCs. These partnerships aim to address the credit needs of underserved markets by embedding lending solutions into Jar’s platform, making credit more accessible to a broader customer base.
Svatantra’s Acquisition of Chaitanya India Fin Credit Limited: Svatantra, a microfinance provider, raised US$233 million in a funding round led by Advent International and Multiples. This investment follows its acquisition of Chaitanya, positioning the combined entity as one of India’s largest non-banking microfinance companies. This merger aims to enhance service delivery and expand its reach in microfinance, particularly focusing on women entrepreneurs.
RBI’s Digital Lending Guidelines – Reserve Bank of India (RBI) issued guidelines to all lenders, including banks and NBFCs, to protect the data of borrowers using digital lending apps. These guidelines mandate transparency in loan products, comprehensive digital overviews for borrowers, and adherence to data privacy standards.
Lending Service Providers (LSPs) Framework – The RBI has introduced draft guidelines for Lending Service Providers (LSPs). These guidelines facilitate transparency by providing borrowers with digital overviews of loan products from multiple lenders. This framework promotes informed decision-making among consumers and enhances the overall lending ecosystem.
Enabling Regulations for Alternative Lending – The RBI’s regulatory initiatives are expected to foster more responsible lending conduct by Regulated Entities (REs) in the alternative lending space. These regulations define the boundaries of industry conduct while ensuring a balance between fostering innovation and safeguarding the public interest.
Harmonized Approach to Regulations – The RBI is adopting a “same activity, same risk, same regulations” approach to enhance oversight capabilities and identify systemic risks in the alternative lending sector. This approach allows for differentiated regulatory treatment based on the specific risks associated with each financial entity and activity type. Fiinews.com
