Digital Lending Startups Set To Lead The New Wave Of India’s Fintech Revolution

Digital Lending Startups Set To Lead The New Wave Of India’s Fintech Revolution

SUMMARY

Total funding in a lending tech startup for Q1-2019 was $322 Mn.

Total credit demand in India is projected to be worth $1.41 Tn by FY 2022

SME loans and personal loans have the highest digital influence as well as purchase

The traces of formal lending are widely evident in ancient texts of India such as in Kautilya’s Arthashastra, which dates back to 321 BC and mentions a network of merchant bankers and financiers. India was also the home to Adesha, a financial instrument comparable to the modern Bills of Exchange. Similarly, other financial instruments related to lending such as the Hundi scheme during the medieval period are mentioned throughout Indian literature and texts.Despite consumer preferences shifting towards digital lending, there are some fundamental hurdles in this sector such as lack of financial literacy, the digital divide between urban and rural audiences, and the lack of a robust banking infrastructure throughout the country. But so far digital lending startups have made a good start in India, and have earned plenty of investor attention in the past four years.

As times changed, lending went from the formal sector to the informal and unorganised lenders. The banking system in India was built to organise this unorganised lending through innovation and structure. But instead of being the disruptor, traditional banks have been disrupted by technology. The rise of electronic based payment system and the decrease in the paper-based clearing is evident when you look at the figures from last year. In FY 2019, the total transaction value of RTGS was 20.8x higher than paper-based clearing.!function(e,t,s,i){var n="InfogramEmbeds",o=e.getElementsByTagName("script")[0],d=/^http:/.test(e.location)?"http:":"https:";if(/^\/{2}/.test(i)&&(i=d+i),window[n]&&window[n].initialized)window[n].process&&window[n].process();else if(!e.getElementById(s)){var r=e.createElement("script");r.async=1,r.id=s,r.src=i,o.parentNode.insertBefore(r,o)}}(document,0,"infogram-async","https://e.infogram.com/js/dist/embed-loader-min.js");!function(e,t,s,i){var n="InfogramEmbeds",o=e.getElementsByTagName("script")[0],d=/^http:/.test(e.location)?"http:":"https:";if(/^\/{2}/.test(i)&&(i=d+i),window[n]&&window[n].initialized)window[n].process&&window[n].process();else if(!e.getElementById(s)){var r=e.createElement("script");r.async=1,r.id=s,r.src=i,o.parentNode.insertBefore(r,o)}}(document,0,"infogram-async","https://e.infogram.com/js/dist/embed-loader-min.js");!function(e,t,s,i){var n="InfogramEmbeds",o=e.getElementsByTagName("script")[0],d=/^http:/.test(e.location)?"http:":"https:";if(/^\/{2}/.test(i)&&(i=d+i),window[n]&&window[n].initialized)window[n].process&&window[n].process();else if(!e.getElementById(s)){var r=e.createElement("script");r.async=1,r.id=s,r.src=i,o.parentNode.insertBefore(r,o)}}(document,0,"infogram-async","https://e.infogram.com/js/dist/embed-loader-min.js");!function(e,t,s,i){var n="InfogramEmbeds",o=e.getElementsByTagName("script")[0],d=/^http:/.test(e.location)?"http:":"https:";if(/^\/{2}/.test(i)&&(i=d+i),window[n]&&window[n].initialized)window[n].process&&window[n].process();else if(!e.getElementById(s)){var r=e.createElement("script");r.async=1,r.id=s,r.src=i,o.parentNode.insertBefore(r,o)}}(document,0,"infogram-async","https://e.infogram.com/js/dist/embed-loader-min.js");

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