Digital lending in India
India has traditionally been an under-banked country. The existing banking system doesn’t work for the less fortunate and those in remotely located areas because most transactions are conducted in cash and ‘brick and mortar’ outlets make services expensive.
India has significantly improved financial inclusion over the past four years. According to Findex, 53 percent of adults had accounts in 2014. By 2018, that number had jumped to 80 percent — a remarkable addition of 300 million accounts in just a few years. Importantly, traditionally excluded groups shared in these gains.
Private-sector banks accounted for just 9.9 million of the 317.3 million accounts opened by May 2018 (3.1 percent). In terms of account ownership, India is now on par with China, another country with strong state backing for bank-led financial inclusion.
Lack of credit is an important barrier to entrepreneurship for both men and women in India. Previous research by McKinsey Global Institute found that India has 23 million enterprises that collectively have a $140 billion gap between the credit they can obtain and the credit they need.
The Pradhan Mantri Mudra Yojana programme, initiated in 2015, provides loans of up to one million rupees (around $15,000) to non-corporate, non-farm micro and small enterprises, with a specific focus on women. Thus far, it has made loans to 13 million new entrepreneurs, and 47.5% of the funds have been dispersed to female entrepreneurs.
The easier and cheaper credit through digital lending has the potential to start a virtuous cycle of formalization, so much so that up to 85 per cent of MSMEs could be formal by 2023. SMEs and MSMEs are the backbones of most economies.
However, they have still not got the importance they deserve considering the pivotal role they play. In fact, India’s 60 million MSMEs are facing a credit shortfall of a massive USD 400 billion. The introduction of digital lending, however, has bolstered the hopes of the SME and MSME players
According to the latest report by Omidyar Network and Boston Consulting Group, digital lending has great potential to disrupt the status quo in MSME and SME dedicated financial services. The report highlighted that digital lending to MSME’s is projected to increase between 10–15X by 2023 to a valuation between 6–7 lakh crores annually.
While digital lending successfully strengthens Indian economy, and while we testify all the virtues and benefits of lending, we should mention Pocket Money Company based in Singapore https://www.pocketmoney.credit/ first global online marketplace with promises to transform the lending experience and connect borrowers with lenders.
Pocket Money delivering innovative solutions and helps borrowers to connect with leading companies around the world, breaking the barriers that prevented them from borrowing money from a competitive global marketplace.
It is also important to note that Pocket Money was founded in early 2018 with a mission to transform lives by delivering innovative and universal access to financial services across Asia and worldwide.
Lenders will gain access to a larger pool of potential borrowers by revenue-sharing with the lending business located all over the world. Focusing on micro-financing, Pocket Money aim to facilitate financial inclusion through cutting edge technology.
