India is starved of affordable, formal credit. Only 11 % of the 60 million MSMEs* have access to capital from organised lenders today. This under-penetration has shackled our economic growth and economic woes of our growth drivers, the MSMEs has only worsened in wake of the current pandemic.
There is a massive market opportunity to be tapped here that has been inhibited because the current rails for flow of capital to the untapped market are broken.
They are broken for the lenders, to be able to reach out to these prospective borrowers. Few of the many reasons include high cost of borrower acquisition and time consuming custom third party tie-ups with loan originators.
They are broken for the marketplaces to connect their customers with lenders. The custom integrations and manual processes are costly and time consuming. The Turnaround Time to get loans deposited to customers is high and their ability to provide custom financial products quickly is restricted, owing to implementation challenges.
These broken rails needed to be fixed and the solution must solve the problem at scale.
The fix for this is a ‘Fixed Line to Mobile Telephony’ moment for ‘Credit Borrower’.
In a complete re-imagination of the credit rails, we recently witnessed a loan disbursement :
- Instantly in borrower’s bank account
- From application to disbursement in less than 5 minutes, with no human decisioning involved!
The next chapter in the story of ‘India Stack’ that brought this to life is the new ‘Open Credit Enablement Network’. It is a common language for lenders and marketplaces to utilise and create innovative, financial credit products at scale.
In this new credit paradigm, the marketplaces/aggregators using these APIs to embed credit offerings in their applications are called ‘Loan Service Providers’ (LSPs).
- How are these ‘Loan Service Providers’ playing a vital role in democratizing access to credit?
- How are they enabling more choices, better credit products and lower interest rates for their customers?
- Why are they exuberant about this new ‘Plug and Play’ architecture and what does it mean for their core business and driving additional revenue?
- What do they mean when they say ‘every marketplace will now become a Fintech company’?
Some of the top lenders in the country such as State Bank of India, HDFC Bank, ICICI Bank, IDFC First Bank, Axis Bank and Bajaj Finserv have come onboard and will soon be in a state of readiness to usher in this new credit paradigm.
Just as UPI presented an opportunity for massive companies to be built and delightful customer experiences to be created, we are excited to see entrepreneurs capitalise on this massive opportunity.
We are excited to share with you :
- Answers to all the questions above
- A product demo depicting the ‘5-minute digital credit journey’
- Introduction to ‘Open Credit Enablement Network’
When: 5 pm to 6:30 pm, IST on Friday, 24th July
Where: Online virtual session on Zoom. Webinar details will be shared with the registered participants.
To confirm your participation and receive the virtual link, please click here: https://bit.ly/LSPOpenHouse1 (same form has been embedded below)
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Recommended Reading :
Chapter 7 and 8 in RBI UK Sinha MSME committee report: https://www.rbi.org.in/Scripts/PublicationReportDetails.aspx?UrlPage=&ID=924
Introduction to India Stack’s fourth layer – Data Empowerment & Protection Architecture: https://www.youtube.com/watch?v=mW__azI8_ow
*Source – Ujjivan small finance Bank RHP & UK Sinha RBI MSME Committee Report