Installment loans add to India’s festive recovery

Indian consumers are ramping up their installment plans to buy everything from washing machines to vacation travel online as the country’s longest Christmas season begins.

These small loans, typically valued at less than 5,000 rupees ($ 67), are growing in popularity as the job market recovers from the COVID-19 pandemic shock. Those payments have increased by at least 20 to 30 percent in the past three months, fintech executives said.

According to a survey by Research and Markets, they are expected to increase by about 66 percent to $ 11.6 billion this year in India.

Photo: Reuters

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

Rising vaccination rates, coupled with falling COVID-19 cases, fuel optimism that people will be more willing to spend on goods and jewelry this year. These consumers are increasingly turning to installment plans from retailers like 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 companies like LenDenClub , Simpl, ZestMoney and KASSE.

LenDen saw loan applications tripling to 170,000 last month and expects to see a further surge to 250,000 in December, Patel said.

In general, spending per credit card increased 54 percent year over year in August, a report by Bank of America Corp shows.

“BNPL is supported by two things, firstly by the Christmas season and secondly by COVID, as people feel more comfortable shopping online,” said Yogi Sadana, CEO of CASHe. “We’re growing by 30 to 35 percent a month, based on the number of loans we give out each month. The pick-up is phenomenal. “

Such loans fill a sweet spot for fintechs. They are aimed at clients who typically don’t qualify for a loan from a traditional bank or who have to wait longer than a few hours to get a loan.

“It’s a win-win for all three players – the borrowers who get credit quickly, the lenders who get an average return of 10 to 12 percent, and we who earn a 5 to 6 percent fee by doing they bring borrowers and lenders to a common platform, ”said Patel.

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