Digital Lending permits borrowers to apply for any personal or business loan
product from any internet-working device at any location. Through digital
lending, Fintech companies , NBFCs and banks provide loans to consumers by using
The entire process will be digitally.
Growth In Digital Lending:
According to media reports, the digital lending market is projected to grow from
USD 100 billion in 2019 to well over USD 350 billion in 2023. Also, India had
the highest FinTech adoption rate of 87 per cent as of 2020.
Digital lending has emerged as an effective alternative to traditional lending
(by financial institutions) for people who are new to credit or are underserved
by the financial system.
What Are The Key Benefits Of Digital Lending:
- The better loan disbursement process
- The easy process to capture the applicant's detail
- Zero paper works
Meaning Of NBFC:
A non-banking financial institution (NBFI) or non-bank financial company (NBFC)
is a financial institution that does not have a full banking license or is not
supervised by a national or international banking regulatory agency. NBFC
facilitate bank-related financial services, such as investment, risk pooling,
contractual savings, and market brokering.
Types Of NBFCs
- Asset Finance Company.
- Loan Company.
- Mortgage Guarantee Company.
- Investment Company.
- Core Investment Company.
- Infrastructure Finance Company.
- Micro Finance Company.
- Housing Finance Company
What Is Peer-To-Peer (P2p) Lending?
Peer-to-peer (P2P) lending enables individuals to obtain loans directly from
other individuals, cutting out the financial institution as the middleman.
Websites that facilitate P2P lending have greatly increased its adoption as an
alternative method of financing.
Disbursal Amount Of Loan & Tenure
NBFC micro finance lenders can now give loans of up to Rs 30,000 for tenure not
less than 24 months as the Reserve Bank has doubled the amount limit for these
Online loans are treated just like any other loan you take from banks and NBFCs.
The same rules apply when you default on an online loan. Defaults generally can
have a negative impact on your future borrowing.
Write Off And Waive Off
The primary difference between write off and waive off of loans is that a loan
write-off is an action taken by the lender when the chances of loan recovery are
almost zero and the bank wishes to maintain a clear record of the unrecovered
loan amount in their balance sheets.
What If Do Not Pay & Safty Measures For Borrower:
- Most of all loans rendered by NBFCs are UNSECURED.
- An Unsecured Loan is a loan provided solely based on the
creditworthiness of the borrower without pledging any collateral as security
in the event of default or non-payment of dues. Unsecured loans are also
referred to as personal loans and generally provided to borrowers with high
- The Credit Information Bureau (India) Limited (CIBIL) is the most popular of
the four credit information companies licensed by Reserve Bank of India. There
are three other companies also licensed by the RBI to function as credit
information companies. They are Experian, Equifax and Highmark.
- Payments delayed or missed for a period of less than 90 days are
considered minor defaults. As a result, your CIBIL score does take a permanent beating but
is affected temporarily. However, if you fail to make payments beyond 90 days,
your account falls under the NPA (non-performing assets) category.
- They may call to your contact list because at the time of taking loan
you allowed your contacts to access. So, your personal data is not secured.
- Loan repayment tenure should be 30 or more days. Loan provided for less
than 30days violates the rules & regulations of RBI.
- Always ask for Loan agreement and check the NBFCs status in RBI official
- They have the right to send LEGAL NOTICE but they have no right to
harass by call or text or whatsaaps etc.
- In most of the cases they don't send LEGAL NOTICE.
- When you fail to pay off the borrowed amount even after a certain period
of time, the lender will report your loan account as a non-performing asset
to the credit bureaus. This will severely affect your credit history and bring
down your credit score as well.
- They cannot file a case of 420 I.P.C
- Aggrieved party can raise a dispute with RBI and can lodge a complaint
in cyber cell against the lender.
Customers To Report Unauthorized Applications To The RBI
The RBI has also advised consumers not to share copies of KYC documents with
unidentified persons and unverified/unauthorized applications. In case people
come across such applications, the details of the application and bank account
information associated with the application should be reported to the concerned
law enforcement authority. One also has the option to report it online
by filing a complaint online through the SACHET portal.
If you take any loan from any organization it is your responsibility to pay off.
Before taking a loan from any digital platform one should check the details of
lending organization in depth.
Digital Lending in India is the solution to all the above problems and a new age
in lending. Fintech companies have combined the current technology's financial
services, making it easier for the lenders & the borrowers to avail and lend the
money. The Indian Fintech landscape has led to several ground-breaking
initiatives & developed innovative models to tackle its longstanding financial
challenges. The value (total) of the digital lending business in India is said
to exceed $1 trillion by 2023, of which consumer lending has emerged as an
integral part. With the availability of limited loans and demand for colossal
credit, digital lenders' opportunity area is abundant.
Indian Lenders Association shall strive hard to promote the concept of Digital
Lending in India and shall ensure a secure framework to make it work. We shall
lend all possible assistance in promoting and safe usage of digital lending in
India. We shall go with the trend and make it a part of our daily lifestyle.
Digital lending and paperless personal loans will further evolve to help many
salaried and self-employed individuals. We are hopeful that the coming year will
make for a conducive growth environment and pushes beyond the last financial
Written By: Sayantan Biswas,
CS Finalist - LLB(H), B.COM(H)