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The Dream Of Full-Stack B2B Digital Lending And The Myriad Challenges

The Dream Of Full-Stack B2B Digital Lending And The Myriad Challenges

Covid-19 has forced B2B lending startups and NBFCs to adopt e-Sign, e-Mandate and V-KYC which were partly physical due to SMEs not being digital savvy and lacks in terms of adequate data

Besides the lack of data, the digital quotient of B2B lending is low also partly because most of the technology-developments have been B2C centric and hence ain’t meeting the B2B demands

Credit managers who earlier were required to visit the MSMEs physically to verify their claims are now asked to do the same through video meetings; this also lowers the credit cost

In 2018, Boston Consulting Group had come up with a report estimating India will create a $1 Tn digital lending opportunity between 2019 and 2023. While the total retail loan disbursement was expected to grow at 2.2x, from $330 Bn in 2018 to $730 Bn by 2023, the report estimated the digital penetration in loan disbursal from 23% in 2018 to 48% in 2023, witnessing 4.67x growth in digital lending.

Since the 2010 global economic crisis, lending has constantly been marked as the cash-cow sector, with payments, consumer companies slowly jumping into the bandwagon, extending short term credit loans to their consumers. Behind the growth is the increasing data that companies have been able to accumulate since the fintech revolution post-India Stack, making lending digital, easier and cost-effective.

The policy and technology developments  — demonetisation and GST, India Stack APIs, and RBI regulations in this regard — have helped fintech adoption to grow exponentially, from 52% in 2017 to 87% in 2019, according to EY.