The Coronavirus has altered worldwide financial rules, as well as everything else. Before the Covid-19, Indian banks were doing well and progressing. And this was despite increased competition from NBFCs as well as financial disasters. Technology had an important influence in the expansion of the banking sector. Previously, the digital lending business in India competed with the traditional banking sector. However, the epidemic accelerated the expansion of digital lending.
This article will highlight the role of the Indian government and infrastructure in the rise of digital lending in India.We will also discuss the future potential of digital financing.
The Indian government is encouraging the expansion of digital lending in India in the following ways:
1. Policies and Standards
The government’s critical measures, such as the federated consent architecture and the newly developed payment environment, are proving to be the driving forces behind digital lending in India. Recently, some fantastic policies concerning interest rates and liquidity controls have been implemented. These methods allow Fintech and NBFCs to better service their consumers.
2. RBI KYC (Know Your Customer) video
During Covid-19, we are all attempting to avoid any social contact. However, a lack of field trips may slow down KYC. The RBI has addressed this issue by requiring users to give Aadhar card information via video call. Video KYC will enable efficient and cost-effective customer onboarding. This KYC procedure is beneficial to banks and NBFCs. It may aid them in combating the financial market slowdown caused by the epidemic.
3. National Payment Corporation of India (NPCI) Initiatives
On November 8, 2016, India experienced a surprise demonetisation. Many large currencies were useless to people. These factors resurrected India’s moribund digital payment culture. NPCI recognized the necessity of the hour and developed revolutionary digital payment apps. Toll collection using FASTags, IMPS, UPI, and Bharat Bill Pay, for example. The rise of digital lending in India is due to the prevalence of digital payments.
4. Internet and technology accessibility
Indian fintech firms benefited from the upheaval brought about by demonetisation. In terms of modern technologies, they improved their game. They employed technology to provide their clients a pleasant experience. The falling cost of internet access in India has also favored fintech company models.
The following aspects should be credited with the bright future of India’s digital lending market:
1. Processing that is efficient
Decisions in NBFCs, Fintech, and digital lending firms are more efficient. They have the technology to increase the buyer’s credibility with a single click. They can quickly determine whether or not to make a loan and for how much money.
2. Metrics for the Elite
The expansion of digital lending in India is being driven by advanced and sophisticated criteria. The data is processed quickly. Lending organizations gain a better grasp of the customer’s profile. Simultaneously, credit alerts and portfolio data enable digital lending platforms to make a safe judgment.
3. Solid Integration
Companies with a digital lending business model rely on robust integration to ensure smooth operation. They have cloud-based links with data providers and credit bureaus. Also , they have an internal data sharing system for branches and workers. They obtain complete information from both internal and external resources in this manner.
4.Customer-focused Approach
The primary goal of India’s digital lending sector is to make documentation and processing easier. Millennials who are salaried or operate a small business like the time-consuming and convenient process of obtaining a loan. The best thing is that attempts are still being made to make digital lending procedures more user-friendly and Methodical.
Parting Thoughts!
It is now critical for India’s conventional banking system to embrace technologies such as human-computer interaction, artificial intelligence, cloud-based connectivity, and so on. Already, the financial system is far more computerized than it was previously. Bank data input and record keeping are becoming more technology-driven than human efforts. However, there is still a lot of room in India for conventional banks to establish high-tech digital lending platforms.