Installment loans help fuel India’s festive recovery



Indian consumers are stepping up buy now pay later (BNPL) installment plans to buy everything from washing machines to holidays online as the country’s longest holiday season kicks in.

Popularity is increasing for these small loans, which typically amount to less than 5,000 rupees (US $ 67) as the job market recovers from the COVID-19 pandemic shock. Those payments have increased by at least 20 to 30 percent over the past three months, executives at fintech firms said.

They are expected to rise about 66 percent annually in India to $ 11.6 billion this year, a Research and Markets survey showed.

Photo: Reuters

“Things are very positive, people have gotten their jobs back,” said Bhavin Patel, co-founder and CEO of LenDenClub, a peer-to-peer lending platform. “The buy now, pay later model is the most popular source of loans for clients who need small loans quickly to exceed immediate cash needs.”

Rising vaccination rates, coupled with declining COVID-19 cases, are fueling optimism that people are more willing to spend on goods and jewelry this year. Those consumers are increasingly turning to installment payment plans from retailers such as e-commerce giants Amazon.com Inc, Flipkart Internet Pvt Ltd, and Ant Group Co (螞蟻 集團) backed by Paytm Ecommerce Pvt, as well as smaller fintech firms. like LenDenClub, Simpl, ZestMoney. and CASHe.

LenDen has seen loan applications triple to 170,000 last month since February and expects a further increase to 250,000 in December, Patel said.

More broadly, credit card spending rose 54 percent in August from a year earlier, a Bank of America Corp report showed.

“BNPL benefits from two things, one is the holiday season and the second is COVID as people feel more comfortable shopping online,” said CASHe CEO Yogi Sadana. “We are growing between 30 and 35 percent per month, in terms of the number of loans we grant each month. The pickup is terrific. “

For fintechs, these loans are hitting a sweet spot. They serve clients who would not normally qualify to borrow from a traditional bank or would have to wait longer than to obtain a loan in a few hours.

“It’s a win-win for all three players: borrowers who borrow quickly, lenders who average 10-12 percent return, and us who earn a 5-6 percent fee by putting borrowers and lenders on a common platform. ” Patel said.

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