Digital Loans – Dutch Uncles

Stuck with Loan Rejections? Now Borrow Loans Digitally through Credit Fair

Shalmoli Sarkar — Mon, 29 Nov 2021 09:31:09 +0000

Yesteryear director Bimal Roy’s masterpiece ‘Do Bigha Zamin’ highlighted the pain and struggle of Shambhu to seek loans from traditional lenders that too without collateral, after Harnam Singh deceitfully mounts a large pile of debt on him. If Shambhu fails to pay off the debt, his land will be seized which seems to be his sole livelihood and asset.

The film has aged 68, but what Shambhu faced is yet unsolved over the years i.e. lack of access to formal credit for lower-income groups. There are approximately 550 million Indians that are underserved with access to formal sources of credit.

There are three challenges faced by the residents of tier-II and tier-III while seeking loans from formal sources :

Lack of prime credit score.
Credit is available at the point of sale via credit card but penetration and usage are low.
High costs are charged by the traditional banks for processes such as onboarding, management, and recovery.

But, Aditya Damani, exactly knew what was lacking in the lending space to help the underserved Indians get loans through formal sources of credit by offering 0% or low cost, short term, unsecured installment loans at the point of sale.

Credit Fair-The inception

Founded in 2018, CreditFair is the brainchild of Aditya Damani whose previous experience of mobile, B2B sales, and Institutional-lending experience has helped him run and grow this venture successfully.

His prior work experience of working with Oakam – a digital micro-lending company based out of London that provides long-term solutions to people who are excluded from the mainstream financial life in London, motivated him to think if the same can be emulated in India. Aditya witnessed the transition of India’s fintech ecosystem from informal to formal and wanted to financially include the ones that are underserved mainly from the tier-II and tier-III cities.

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There are approximately 550 million Indians that are underserved with access to formal sources of credit.

Lending loans digitally to the ‘Bharat’

What makes Credit Fair differ from other digital lending platforms is its partnering with specific merchants and dealers to offer 0% EMI and subsidising the interest cost.

Earlier merchant partners grappled to provide point of sale financing options to their customers due to the inability to pay their high subvention rates, lower approval rates, and the time to loan disbursal can be as long as five days, which resulted in the low number of customers.

Digital lending platform Credit Fair acts as a bridge between the customer seeking loans and the merchant companies willing to give loans.

With the merchant companies it forms a symbiotic relationship giving the below advantages:

Offering no-cost EMIs and growing revenues upto 45 percent.
Get quick notifications using Credit Fair’s app.
Get a higher approval rate with a CIBIL score as low as 600
Faster loan disbursements

To name a few Careerpoint Kota, Indira IVF, Miles Education, Saviesa , Sleek Kitchen from Asian Paints are some of the merchant companies that lend loans through Credit Fair.

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Credit Fair is a microlending fintech platform that lends loans at low cost or 0% EMI to the Indians from small towns and cities.

Sectors in which loans are offered

Credit Fair offers loans to their customer seeking loans in health, education, home decor, and electric vehicles. The need for loans in these sectors has emerged in the pandemic due to online education paving the purchase of laptops and tablets, medical emergencies due to Covid-19, home renovation, and electric vehicles which is to be the government’s focus for reducing pollution. These are high growth sectors and people consuming these consists of the target segment. Moreover, the combined annual spend on these sectors amounts to $20 billion and it gets the first-mover advantage since few lenders offer loans specifically in these sectors expanding the ambit of financial inclusion. The loan amount ranges from USD150-25,000 and tenure from 3 months to 3 years.

Is the borrower genuine?

Since, the loans offered to the borrowers are unsecured, monitoring the end-use of funds lent and giving money for specific use cases, and knowing where the money is going is crucial for Credit Fair’s business model. To minimise the risk of defaults, it has built a machine learning model to estimate the credit limit of borrowers.

In addition to this, it has stringent processes to assess both financial and behavioural parameters to develop a credit profile of a borrower. Among, financial parameters, it analyses an applicant’s banks statement and credit history to understand the capability for repayment of the loan. In behavioural parameters, it leverages the apps used, transactional SMS, and scans the social media behaviour to understand a borrower’s willingness to pay. Identity and fraud checks are also conducted at various points to establish the authenticity of the candidate.

Gamification for collection of loan repayment

Credit Fair has an in-house digital collection facility that realises loan repayments through e-mandates. Currently, 60-70 percent of its customer base uses e-mandates for loan repayment. And 8-10 percent would miss on repayments. Credit Fair uses gamification to induce the right behaviour among their borrowers to ensure and make them understand their consisting defaults will impact the credit score that might prevent them from seeking bigger and better loans in the future. For intentional loan defaulters, Credit Fair engages with its customers to restructure the loan payment period.

It uses an auto-decisioning rule engine to improve the efficiency of operations and reduce turnaround time.

Credit Fair’s Money matters

Recently in November 2021, Credit Fair has raised undisclosed funds from Northern Arc to build its capabilities to expand its ambit of financial inclusion to the underserved Indians belonging to remote towns and villages. With the fresh injection of funds, they want to expand their credit products via their mobile app to offer digital financial services to small businesses and middle and lower-income groups. Besides, the fundraise Credit Fair will benefit from Northern Arc by leveraging its expertise of advising hundreds of leading companies in financial services to optimise their debt-raising strategy in expanding products and services across all market categories and become the market leader. Till date, more than $7 million loans have been disbursed, and more than 30,000 customers have availed of their digitalised and automated service.

In the future, it plans to raise $5 million to reach a $15 million monthly disbursement rate and $75 million assets under management in 2 years.

The road ahead for lending loans

By 2025, Credit Fair aspires to witness atleast 1 million Indians having access to the right amount of credit at the right cost and time. They want to penetrate deeper into the masses to offer no-cost EMIs and offer better loan terms and personal loans than what banks and large NBFCs offer. Moreover, they want to foray offering loans to sectors that cater to the individuals of the age bracket of 25-40 years. They want to build a credit ladder for those individuals with no credit history.

It wants to build a P2P lending platform to lower the cost of funding and keep the cost minimum for customers.

The post Stuck with Loan Rejections? Now Borrow Loans Digitally through Credit Fair appeared first on Dutch Uncles.

RupeeRedee, Making Lending Safe, Quick And Hassle-Free For India’s 1.3 Billion

Shalmoli Sarkar — Thu, 12 Aug 2021 05:35:09 +0000

The demand for personal loans has grown over the years for low-income families and borrowers, for consumption purposes. But sadly, this space in India is highly underserved. The chances of availing monetary assistance for the underserved have become thinner, as, amid unemployment, business shutdowns, and paycuts, banks and NBFCs have tightened their purses. The traditional lenders are wary of lending to people who are new to credit or have a limited credit history.

In such grim times, digital lending startups have bridged the gap of lending by offering loans to the underserved sector.

According to Statista, digital lending is one of the fastest-growing fintech segments in India that grew from $9 billion in 2012 to nearly $110 billion in 2019. The digital lending market will reach a value of around $350 billion by 2023. The fintech startups and non-banking financial companies (NBFC) to be the main drivers of the digital lending sector.

The new-age digital platforms differ from a traditional bank’s archaic process of sanctioning loans by providing a simple and intuitive onboarding procedure and faster loan disbursals.

One such digital lending platform that caters to India’s underserved market is RupeeRedee. Powered by Amazon Web Services (AWS), RupeeRedee makes digital lending safe, quick, paperless, and hassle-free.

What is RupeeRedee?

Founded in September 2018, RupeeRedee is a new-age B2C financial services platform that leverages technology to make lending quick and easy. Its AWS-powered platform facilitates instant small ticket and short-term personal loans within a 10-minute turnaround through the website and mobile app for salaried and self-employed individuals addressing their daily and instant needs. To date, it has enabled 1.5 lakh credit transactions.

RupeeRedee has a captive NBFC with FincFriends Private to be the first 100% digital NBFC registered with RBI.

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According to Statista, digital lending is one of the fastest-growing fintech segments in India that grew from $9 billion in 2012 to nearly $110 billion in 2019.

How does RupeeRedee facilitate quick digital lending to 1.3 Billion Indians?

Out of the 800 million debit cardholders, a fraction of them are credit cardholders. Though the majority of them have a steady income, they do not have access to formal credit sources forcing them to rely on informal credit sources. By offering small-ticket loans RupeeRedee is bridging a gap in the market and also building a credit history to enhance an individual’s creditworthiness.

RupeeRedee processes loan requests 24×7. This is a blessing for the underserved ones as sometimes they might need instant loans due to an emergency. Also, looking at the current human health crisis, people would require money to fulfill medical expenses.

Many MSMEs can benefit from this instant sanction of loans or cash which they might use for business transactions to be done beyond office hours.

Borrowers if due to some reason are not able to pay the loan, RupeeRedee has an extension facility wherein one can extend the repayment date by a minimum of 5 days by paying an extension fee.

What products does RupeeRedee offer?

RupeeRedee operates with multiple NBFCs in the background to facilitate short-term personal loans coupled with PhyGital, POS (Point-of-Sale), LaaS ( Lending-as-a-Service), and brokerage services.

How to apply for a loan in RupeeRedee?

RupeeRedee has simplified the loan process by keeping minimum formalities. Here are the documents required:

Aadhaar, Driving Licence, Voter Id
Latest Photograph
PAN Card
Bank Statement/ Access to bank account details

The tech stack of RupeeRedee

RupeeRedee has several backend systems such as loan origination system, CRM (Customer Relationship Management), loan management system, and collection system. They use Linux, Windows, and other relational database systems like MySQL, MS-SQL. The lending platform works with more than 40 cloud servers with a combination of production, pre-production, and development servers.

What lies ahead of the digital lending platforms in India?

The digital lending sector needs to align itself to changing consumer preferences and mould its products to suit the consumers’ requirements. The digital lending space will have ample business opportunities for lending the MSMEs that have been cash-strapped in the pandemic.

With a deluge of affordable smartphones and falling data prices penetrating rural areas, the digital lending sector is expanding the gambit of financial inclusion to tech-savvy youngsters, low-income families for instant short-term credit availability. Digital lending platforms need to offer convenience by creating minimum formalities and a hassle-free loan approval process.

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How Fintech Startup MoneyTap made Personal Loan Available on a ‘Tap’

Koyna Mitra — Sun, 04 Jul 2021 10:35:05 +0000

Holding on to your salary till the end of the month is tough. Taking a personal loan from the bank to pay for your monthly Netflix subscription or some dinner takeouts, seems too far-fetched, right? Not to forget the never-ending paperwork that accompanies a personal loan. Therefore, a paperless, hassle-free, access to free-flowing credit, available at the tap of your fingers would feel like a godsend. That’s exactly what MoneyTap did; it made personal loans available as easily as a few taps on the smartphone.

What is MoneyTap and How Did it Come about?

Founded by IIT and ISB alumni Anuj Kacker, Bala Parthasarathy and Kunal Varma, MoneyTap caters to the credit needs of the middle class. Personal loans and credit cards are not very popular among the salaried and middle class of India because of the incessant hassles of paperwork and the high-interest rates on credit card loans. Therefore, founding a company that provides a credit line up to 5 lakhs to its consumers was an ambitious feat.

In 2014, Bala Parthasarathy, Sanjay Swamy and Shripati Acharya, started a Seed stage investment firm called Prime Ventures Partners which invested in startups like HackerEarth, Nimble Wireless, Ezetap and Happay.

After two years with Prime Ventures, Bala was once again allured by the idea of entrepreneurship and this time it was the enticing world of fintech. TapStart founders Kunal Verma and Anuj Kacker followed Bala into founding this fintech startup. The duo sold off their stakes in TapStart in 2015, to venture into MoneyTap.

The founders noticed that the monetary needs of the middle class can be easily solved with a small credit line. So, in 2015, they launched an app, in partnership with RBL Bank and several NBFCs, which became India’s first app-based personal line of credit financing. Going with the ‘cashless India’ culture, MoneyTap brings a flow of personal credit lines to your fingertips.

The app leads a 100 per cent paperless process. Anyone, between the age of 23 to 55 with a minimum salary of 15,000, a smartphone and a PAN can check for their eligible credit limit in less than 15 minutes through the app. The credit limit approved can go up to 5 lakhs but the consumer only has to pay the interest on the amount that they choose to borrow. Once the credit line is approved and set up, the customer can transfer money to their bank account or even spend it directly with the credit card that comes with the MoneyTap account. One can also check their spendings, repayments and credit limits on the app.

Personal loans and credit cards are a rare thing in India owing to the fact that the interest rates are very high. Staying true to their word of providing affordable and easy access to credit, MoneyTap offers loans at an interest rate as low as 1.08 per cent per month, and 13 per cent to 18 per cent per annum, and flexible loan tenures of 2 to 36 months. The loan can be repaid in monthly installments within the duration of 36 months and once all the EMIs are paid back, the credit limit gets replenished making it viable for borrowing again.

One of the initial challenges that the company faced was the conservative nature of banks. It has been very difficult to raise money and also comply with the rules and regulations of the banks and NBFC. Another challenge has been the difficulty in catering to demanding customers. With the banks being conservative, consumers expect flexibility and good customer service from the app. The two rounds of funding has seemed to bring a balance and has bridged the gap between the conservative banks and demanding customers.

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The app owes its quick success to the tech-savvy millennial of the country who despise tedium, and what screams ‘tedium’ more than the long application process for a personal loan at the bank.

MoneyTap’s Sure-Footed Business and Revenue Model

The business of money lending is a very risky one and is prone to fraud. The increasing number of fraudulent cases is the reason that the banks increased the interest rates on credit cards. Therefore, MoneyTap is very conservative about who it gives credit to. When signing up for the service, the customer goes through a chatbot interface that connects to the banking system and the credit bureau to investigate the customer’s credit history. The approval depends on this. The app happens to reject about 60-70 per cent of the application.

Every credit line comes with an initial processing fee of Rs.500, which is another way to ensure the genuineness of the customers. Despite its high rejection rate, the company was successful in making a customer base of 300,000 registered users from 14 cities in India, within eight months of its inception. In 5 years, the company has expanded to 60 Indian cities, and the plan is to expand to 200 soon. The app has been downloaded over 10 million times and disburses more than Rs. 2500 crore annually.

Being the first of its kind, MoneyTap has made a strong customer base with 90 percent of active customers, drawing credit multiple times from the app. The initial processing fee and the interest on the borrowed amount of credit line bring about a strong revenue for the company. The app owes its quick success to the tech-savvy millennials of the country who despise tedium, and what screams ‘tedium’ more than the long application process for a personal loan at the bank.

With two rounds of funding, MoneyTap has raised an amount of $82.3 Million. The latest round of funding took place in January 2020 and raised a funding of $70 Million. Its prime investors are Sequoia Capital India and Bala Parthasarathy’s own firm Prime Venture Partners. The second round of funding brought in new investors such as RTP Global, Aquiline Technology Growth & MegaDelta Capital.

MoneyTap: A Forerunner for Major Credit Lending Businesses

Since the inception of MoneyTap, a number of credit line financing startups have cropped up. Startups like PaySense and ZestMoney are MoneyTap’s biggest competitors, having been founded in the same year and offering similar services. MoneyTap not only has the upper hand in the competition being the first of its kind but it also offers lower interest rates.

In 2019, MoneyTap was awarded a Non-Banking Finance Company licence by the RBI. Their aim was to use the licence to enter into co-lending with their lending partners and offer better interest rates to their customers. The NBFC licence bolstered their market position. Shortly after getting the licence, MoneyTap raised its second round of funding of $70 Million. The acquisition of these fundings affirmed MoneyTap’s leading position in the fintech sector. The funding would be used to scale their business as they plan to 200 Indian cities in 2021. It will also be used to innovate their data backed lending models. MoneyTap’s surefooted steps have helped it create a loan book of Rs. 1000 Crore. The company has been on a 4 fold growth trajectory since 2019 and with the NBFC licence plans and the fundings raised, plans to accelerate it further.

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Their plan was to grow slowly and ensure the reliability of their customer base before expanding into new horizons.

Keeping the Competition at Bay

Finomena was one of MoneyTap’s biggest competitors till its untimely fall in 2017. It was a fintech company that helped students and young professionals in buying electronic devices and appliances by providing them small-ticket loans. The concept was quite like MoneyTap, except that it was focused on a particular segment of the community and very specific on how the loan is used.

The odd specifics of the customer base put it at a disadvantage in the market where it was competing with major fintech lending startups like MoneyTap and ZestMoney. In two years’ time, the reserves dried up due to high cash burn. What caused the reserves to dry up? Again, the oddly specific demographic. As mentioned earlier, the money lending business needs a keen eye. What MoneyTap does when signing up a customer for their service, is check if they have a regular source of income and its reliability. A customer base of students and young professionals is hardly expected to have a regular source of income.

What MoneyTap did differently was to keep the rejection rates high. Their plan was to grow slowly and ensure the reliability of their customer base before expanding into new horizons. While offering an easy and affordable credit line to their customers, MoneyTap ensures increasing their revenue through low-cost and tech-friendly solutions.

The Post-Pandemic Cashless Culture

Since the onset of the pandemic last year, there has been a rise in fintech companies. Paytm and UPI have restored trust in the fintech businesses and the pandemic has made people wary of stepping out and doing their transactions through cash. Therefore, the cashless culture will see a new trend in the post-pandemic scenario, a trend that will work in the favor of MoneyTap.

Bala Parthasarthy, Anuj Kacker, and Kunal Verma started this company with the vision to provide the middle class of India with easy and affordable access to credit lines without the hassle of several bank visits and tons of paperwork. The company expanded to 14 cities in the first eight months of its inception. In a matter of five years, it grew up to 60 with the majority of its users coming from the top metros like Delhi-NCR, Bengaluru Mumbai, and Chennai.

What the Future Holds

The founders plan to expand to 200 Indian cities in 2021. The post-pandemic cashless scenario might help them push forward with the plan as people from smaller cities of India take advantage of the app. The app has grown more user-friendly over the years. New features have been added that support Indian languages. It has attracted customers from Tier I and Tier II cities.

The app caters to the credit needs of the middle class. There is a dense concentration of the middle class in Tier I and Tier II cities. The app has seen a trend during the pandemic. Now that digital transactions are being favored, people are using their credit line for essentials, and Health and Education loans have seen an uprise.

The overly simplified process of the app attracts the tech-savvy millennials with the average age of the customer base of the app being 28-30. Judging by today’s scenario, the app might be successful in catering to an even older demographic. The company currently targets customers with average incomes of Rs. 30,000 to Rs. 40,000 per month, but it is planning to delve into the prospect of reaching out to groups having income as low as Rs. 10,000 to Rs. 15,000.

In September 2020, Renaud Laplanche who is considered the Godfather of Fintech joined the advisory board of MoneyTap. This means that MoneyTap is ready to test global waters. For now, they are looking to expand into Tier I and Tier II cities and the global expansion would start with SouthEast Asia and Middle East markets.

MoneyTap launched MoneyTap Labs at the beginning of this year with the vision to educate people on how to use financial products. They have been actively hiring engineers since last year. MoneyTap Labs have launched the SuperSplit app which would help users to track shared expenses and settle payments. More new products are in the pipeline.

The story of MoneyTap is the story of authenticity in innovation. It was found with the thought of catering a product to the middle class, despite knowing that the middle class seldom uses it. It nevertheless succeeds by keeping authenticity, reliability, and a sharp eye for detail at the core of its platform, making it a truly innovative product.

For more inspiring stories check out our Inspire section!

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Fintech Start-up Slice Builds Super Card for Indian Millennials

Anju Nambiar — Thu, 01 Jul 2021 05:35:04 +0000

Who is Slice?

Slice is an Indian Fintech Start-Up headquartered in Bangalore, Karnataka. Led by Rajan Bajaj, the Founder and Chief Executive of Slice, they are taking on the credit card business of Indian banks. The company’s target customers are millennials and the Gen Z population of India in the average age demographic of 23 years who have inadequate credit worthiness or a non-existent credit score. Some of the services offered by Slice include bill payments, expense management, and a rewards system. Slice is a credit card-based utility payments start-up, and they provide their customers, credit limits through their own balance sheets. Slice recently raised $20 M in a funding round backed by Blume Ventures and Gunosy Capital.

What is the Slice Super Card?

The Slice Super Card is a Visa credit card for Indian youth. The USP of this card is that it’s a lifetime free card without annual fees, hidden charges, or joining fees unlike a traditional credit card offered by a bank.

Idea behind the Product

Slice’s super card is a product that’s being positioned as one of the best ‘credit card challengers’ in India. Slice’s super card has shown the potential to change the upcoming generation’s perception of credit cards. It’s been hailed as the ‘best way for millennials and Gen Z to make payments.

When the founder of Slice interacted with his friends, he learned that although credit cards are useful financial tools, they found them too complicated to use. That is the moment when the ‘Super Card’ product was conceptualised. It was built to simplify credit card usage and make it more accessible to the Indian youth.

Credit card usage in India

There is a huge disparity between the circulation numbers of credit and debit cards in India. While the number of debit cards in circulation has long crossed the 1 billion-mark, credit cards are still averaging in the 50 million.

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Slice’s super card has shown the potential to change the upcoming generation’s perception of credit cards.

What’s in it for me?

The much-needed conversation around credit cards has increased in the fintech space. Whether it’s ‘Fampay’ giving a financial education to Indian teens, or CRED which is famous for its stellar rewards, and of course, Slice, fintech start-ups have identified the challenges around credit in India. This space is open to innovation since credit and loan products from traditional banks and financial institutions are notorious for their lack of user experience.

The hustle culture is strong among Indian youth where they don’t stick to a single paying job but work on multiple freelance projects. These customers aren’t recognised by banks and are largely ineligible for loan and credit parts. Taking the cue from Slice, focus on the customer experience and adopt a ‘customer first’ approach while creating payment and loan products. The current Indian consumer base who can be eligible for credit and loan products is in the 400 million range which fintech start-ups are yet to acquire. The market is huge and is for new entrants who can bring in innovation.

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Progcap, Digitising Access to Credit to Underserved Retailers

Anju Nambiar — Wed, 30 Jun 2021 03:35:04 +0000

Who are ProgCap?

ProgCap is a New Delhi based Fintech start-up and a ‘last-mile retail financing solution provider’. ProgCap’s co-founders are Pallavi Shrivastava and Himanshu Chandra. The company has its in-house fintech product targeted at the ‘small Indian retailer’ market. They act as a financier for the SMB (small and medium-sized business) community. ProgCap has recently raised $25 M in a Series B investment round backed by Tiger Global and Sequoia Capital India.

What Led to Its Inception?

The start-up was conceptualised when one of the founders of ProgCap became aware that credit and working capital access was completely non-existent in the retailer segment. The solution was soon found in ‘well-structured financing products’ and the market opportunity was found to be 15 million retailers valued at $800 B.

ProgCap’s Goals and Vision

The company holds a vision of ‘building a full-stack digital platform for last-mile retailers. It also wants to become ‘the first full-stack retailer-focused digital bank to facilitate capital flow across the supply chain’ so that disadvantaged retailers can get access. ProgCap aims at making its impact and presence felt across 5 million enterprises by the end of 2023.

Learnings, Insights and Takeaways for Fintech start-ups

ProgCap discovered an untapped market with a massive potential thanks to their keen eye. It helped them to uniquely position themselves with a unique product. By addressing the challenges faced by small retailers who contribute a sizeable chunk to the Indian retail Industry, they found the opportunity to fill large shoes.

They brought innovation into a neglected market making them a particularly important entity for their target consumers. The collateral free loans availed by small retailers through ProgCap are immensely beneficial for their financing needs. ProgCap’s success can be attributed to a promising vision, strong capability and the support of its ‘outstanding portfolio quality’.

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The solution was soon found in ‘well-structured financing products’ and the market opportunity was found to be huge (15 million retailers valued at $800 B).

What’s in it for me?

Small businesses in India need a leg up when it comes to financial assistance. There’s ample room in the fintech space for innovative solutions by start-ups. Fintech start-ups stepping into this space can partner or collaborate with small finance institutions to fulfill working capital requirements of small businesses. Supply chain finance is a profitable segment in the lending business, and your fintech product can help digitise the process. The main problem for small businesses especially in the retail and supply chain segment is that they are located in geographies which are inaccessible by small financial institutions and their branch networks. Your fintech product can serve as the digital bridge to unite the two entities.

On another note, if you are a retail small business, you can digitize your supply chain through ProgCap’s services. If you are new to the retail business and new to the world of credit as well, you can skip the bank and head straight to ProgCap to raise ‘last-minute capital’ with ease. You will experience flexible repayment options tailored to your cash flow. ProgCap has an interesting portfolio of services that you can look into such as ‘transaction tracking’ and digital payments.

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How to Avoid Unauthorised Digital Loans: Small Business Tips

Smruthi Krishnan — Fri, 05 Feb 2021 08:35:02 +0000

In the pretense of providing quick, hassle-free loans, a large number of unauthorised digital loan platforms are trapping several small businesses into the vicious trap of duplicitous practices. Owing to the pandemic, hundreds of small businesses were crashing with little or no funds to sustain and turned to digital lending platforms for survival which ended up backfiring as these apps demanded high-interest returns and resorted to coercive strategies to harass small scale entrepreneurs.

These apps misuse personal information to badger borrowers charging exorbitant interest rates like 1% per day. They have shorter repayment periods beyond which they torment defaulters leading to a surge in suicides across the country. Authorities have also ordered payment gateways such as Razorpay terminate transactions through these apps. The RBI has formed a group to come up with regulatory measures for digital lending players and suggest better consumer protection measures.

Small business entrepreneurs must beware of such apps to avoid fraudulent activities and forceful torture. The following steps will help you steer clear of such unauthorised digital lending platforms:

1.According to Play Store’s policies “Financial services apps offering unsecured or secured personal loans must disclose key information in the app description on the store”. Make sure you check the app description for details like minimum and maximum periods of repayment, maximum annual percentage rate, representative example of the total loan cost, etc.

2.Legitimate public lending activities are undertaken by Banks, Non-Banking Financial Companies (NBFCs) registered with RBI and entities regulated by the State Governments. Resort to RBI verified banks and entities for borrowing instead of unknown sources.

3.Verify the origins of the firm offering loans digitally. If you face any time of harassment, report to authorities.

4.Never share copies of KYC documents or personal information with unknown platforms or apps. Report such Apps/Bank Account information of said Apps to law enforcement agencies or complain online via the Sachet portal.

5.Make sure the lending platforms disclose the names of the banks or NBFCs upfront. You can access the names and addresses of NBFCs registered with the RBI and can also file complaints against said entities on RBI’s portal.

Precaution is better than cure, be a smart and safe small business, before it gets too late.

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