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© 2024 LightFi India Private Limited. All rights reserved.
(Formerly known as Habile Technologies)
Published July 2023 on LinkedIN
© 2024 LightFi India Private Limited. All rights reserved.
(Formerly known as Habile Technologies)
After smartphone penetration, people are not watching their SMS at all. They use SMS only for OTP related transactions. That’s it.
But What can a Lender see in your SMS after you consent to them?
Lender can see income, expenses, and any other Fixed Obligation like (EMIs/Credit Card).
1) Income – Parameters like Average Salary Credited, Stable Monthly inflows like Rent
2) Expenses – Average monthly debit card transactions, UPI Transactions, Monthly ATM Withdrawal Amount etc
3) Fixed Obligations – Loan payments have been made for the past few months, Credit card transactions.
It also tells the Lender the adverse incidents like
1) Missed Loan payments
2) Cheque bounces
3) Missed Bill Payments like EB, LPG gas bills.
4) POS transaction declines due to insufficient funds.
A massive chunk of data is available in our SMS (more than 700 data points), which helps Lender to make a credit decision.
An interesting insight on vehicle loans for lenders.
A trend we are seeing today – the first-hand vehicle ownership is decreasing with time. Why? People are upgrading their vehicles in every few years because of technological advances. And, this can be seen more with the millennial generation.
So, what should a lender do in terms of financing?
– Estimating the residual value of the vehicle at the start of the financing period.
– Charging a borrower only for the residual value (which is the difference between the value after a few years and the current value)
Example: A bike currently is INR 1 lakh. You want to buy the vehicle for 2 years. A lender will estimate the residual value of that bike today and what it would be after 2 years. If the estimated residual value = INR 45,000, the lender will charge you only that (say, INR 55,000 with interest for this instance) during your tenure.
At the end of 2-year period, you have 3 choices:
1. Return the bike and upgrade to a new one without going through the struggle of selling it.
2. Pay the lump sum remaining amount to own the vehicle outright.
3. Extend the financing and own it by keep paying the EMIs for the remaining amount of the vehicle for the next 12 or 18 months.
Benefits for the borrowers?
– Flexibility to use a vehicle and upgrade to a new one.
– Affordability to not pay for the complete value of the vehicle with the intention to use for a lesser amount of time.
– Convenience in owning the vehicle.
Say goodbye to the old lending option and embrace the new way of financing for vehicle by lenders!
How many of us know this?
1) Tiktok does Lending ( is it an entertainment company or social media company or a fintech company?
2) Youtube China does Lending
3) Top 100 internet companies in China(no matter what business they are in) do Lending
The team which was heading Lending in Tiktok was the Advertisement team. If we do Ads, we do X no of revenue. But if we do lending, we’ll get X+30% more revenue. This is on the same Ad spot.
Ad team has transformed into a lending team, and in today’s world, it’s possible because the subject matter expertise can be put in as an API and given to you.
Embedded Lending as a service is becoming popular in India too, and I am happy to be part of this ecosystem.
The answer is No. Only the top 10 crore people have access to many credit products in India. Almost all Banks focus on this market.
Once you go beyond that, the credit access rate has dropped significantly due to multiple factors.
1) Customers who are having low income(30-40K per month)
2) Not earning from an employer who belongs to Category A or B
3) Not from Tier 1 or 2 cities
NBFCs and Fintechs focus on the above segment, pushing another 10 crores of people.
But in India, 70 crores more people are formally or informally employed, which still needs to be tapped.
Frauds in Digital lending apps:
True Incident:
– Once you install the app, it will ask you to get a loan for 4000.
– They will ask you to repay it within 2 days with a 40% interest rate.
– If you don’t repay, it will send messages to your most frequented contacts, “He has taken a loan of Rs. 4000 with you as a guarantor. If he doesn’t pay, your PAN Card and Aadhar Card will be blocked.”
– They will also create a WhatsApp group with your closed contacts and send nasty pictures.
– They will call you from different numbers and scold you badly.
Consequence:
– Very few borrowers inform Cybercrime (helpline no 1930).
– Cybercrime tries to find out who the fraud is.
– It traces from which bank account the money has been transferred to the borrower.
– Unfortunately, a fake bank account has been created by some other victims’ Aadhar and PAN Card. Only from these accounts are the funds transferred to the borrower.
– Even if Cybercrime tries to find and delete the apps, Fraudsters can easily create another app within no time.
– Borrowers are committing suicide because of not handling the stress.
Solution:
– Proper awareness should be given to society.
– The RBI should take the necessary steps, which they are already doing it.
– Fraud Cases are significantly higher on Google Playstore rather than iOS store. Google App Store should have stringent policies for uploading a digital lending app.
My thoughts:
– Google should give a verified tick mark in the app store after checking the lender is using a license of an NBFCs/Banks. Google can easily do it as we have only 9000+ NBFCs and 200+ banks.
#loanappscams #loanfrauds #manispeaksmoney