New Delhi: People looking for small instant loans— ₹ 10,000 to ₹ 7 lakh—can go to the digital lending marketplace, where digital lenders bring banks and borrowers together, provide easier access to loans, and through automation put all required documents into a digital format.
Digital lenders, through the use of data analytics, help lend various secured and unsecured loan products to consumers without hassle.
Customers can take out instant loans for a variety of purposes, such as medical emergency, travel, home renovation, wedding, or purchasing vehicles and gadgets.
With the help of technology, digital lenders have reduced the time taken for the loan process – from loan application to loan disbursement – from at least a week to minutes.
“The digital process brings the paper-based lending process online. The offline process can take between one and two weeks, it boils down to just 30 minutes,” said Adhil Shetty, CEO of BankBazaar.
In the digital process, physical paperwork is not required, the customer does not need to provide personal information such as bank account statements, income details, address and identity proofs. In India, this is done simply through Aadhaar-based e-kyc, which speeds up the verification process, reduces the risk of fraud, and the loan amount is disbursed directly to the customer’s bank account within minutes.
But if a customer is new to credit or has zero credit history, some additional details like income and savings may be required.
“The biggest advantage of digital lending is that the process is quick, easy and (almost) paperless. Customers can get loans on better terms because they can compare loan offers from multiple lenders in one place” , said Gaurav Chopra, CEO of IndiaLends.
In the digital loan market, customers can find different loan offers from different banks and NBFC and can compare interest rates.
Using Aadhaar and PAN technology and details, digital lenders tap into customers’ credit database and other financial histories, which helps them analyze a borrower’s creditworthiness.
“Digital lending also allows lenders to better underwrite risk because they have a lot more customer data than a traditional lending system,” Chopra said.