In an interview with MintGenie, Ekambaram said that a noticeable transformation in mindset is evident, particularly among the younger demographic, as they increasingly adopt the notion of borrowing for consumption, a departure from perspectives held in the past decade.
Edited Excerpts:
What are the factors behind the growing demand for small-ticket loans among consumers despite increased interest rates?
The surge in demand for small-ticket personal loans is largely attributed to changing consumer behaviour, playing a crucial role in driving this trend, especially within consumption-driven growth models. A noticeable transformation in mindset is evident, particularly among the younger demographic, as they increasingly adopt the notion of borrowing for consumption, a departure from perspectives held in the past decade. The substantial evolution in loan processes, strongly influenced by digital infrastructure, has greatly improved flexibility and convenience for consumers, particularly the younger generation. This evolution serves as a pivotal enabler for the current trend of consumption-driven growth.
What is your advice to customers in terms of borrowing from digital lending apps? How can they stay away from illegitimate apps?
When contemplating borrowing from digital lending apps, customers must engage in comprehensive research and exercise caution to ensure a secure and legitimate borrowing experience. Initiate the process by verifying the credibility of the lending app by ensuring proper registration and compliance with financial regulators. Borrowers must thoroughly read and comprehend the terms and conditions, pay attention to interest rates and fees, and steer clear of apps with unclear or exorbitant charges.
Examine the privacy policy to confirm the secure handling of personal and financial information. Exercise caution when encountering too-good-to-be-true offers and unrealistic promises, common tactics employed by scams. Legitimate platforms prioritise data security and maintain responsive customer support. Confirm that the app employs secure and encrypted connections for transactions, scrutinise app permissions, and be cautious of unnecessary access requests.
Avoid upfront payments, as legitimate lenders do not require them. Additionally, recognise that there are some basic and simple steps to safeguard oneself from illegitimate lending apps, such as staying informed, trusting instincts, and following a diligent decision-making process. Diligence and adherence to these straightforward measures significantly reduce the risk of falling victim to fraudulent digital lending apps.
Recently, MeitY warned against shady loan apps. How do you think the industry can tackle the menace caused by the rise of “shady, illegal” digital lending apps?
The rise in fraudulent loan applications poses a significant threat to borrowers due to illegal practices such as charging exorbitant interest rates and using mental harassment as a way to coax borrowers to repay.
The RBI endorsement of fintech forming a SRO emphasizes a joint dedication by both industry players and regulators to confront unscrupulous lenders in the digital lending sector. This collaborative initiative reflects a proactive stance in addressing challenges posed by fraudulent activities, reinforcing the commitment to maintaining the integrity of the financial ecosystem.
Being key players and influencers in the industry, fintech lending companies must also undertake initiatives such as consumer education to empower individuals to recognise and avoid potential risks associated with dubious digital lending platforms. Collaboration between digital lending platforms and traditional financial institutions, supported by whistle-blower mechanisms and quick response systems, establishes a united front against fraudulent activities. This collective effort aims to ensure a secure, trustworthy, and resilient digital lending ecosystem, prioritising borrower well-being and upholding the integrity of the financial sector.
What are your expectations from the forthcoming interim budget?
In 2024, India stands out in the global economic landscape, projecting an impressive growth rate of 6.3 per cent amidst an overall projection of three per cent. This noteworthy growth is attributed to factors such as robust financial inclusion, strong consumer demand, a youthful demographic, and improving trade balances. Despite these positive indicators, India faces challenges from disruptive forces like higher interest rates, regulatory assertiveness, climate change, and geopolitical tensions.
Looking ahead to the impending interim budget announcement, two critical areas require attention for sustained growth and resilience in the financial sector. Firstly, there is a call for the government to consider relaxing rules regarding reverse-flipping foreign entities, creating a more favourable environment for international investments. Secondly, addressing the challenges faced by NBFCs due to increased risk-weighted assets (RWA) is crucial. The elevated cost of borrowing from banks, stemming from these increased RWAs, impacts the pivotal role NBFCs play in extending credit across various sectors. Streamlining RWA norms is advocated to ensure a more efficient lending ecosystem, contributing significantly to overall economic stability and fostering an environment conducive to listing in Indian markets.
What are some of the digital lending trends you anticipate in 2024?
The robust demand for credit in the Indian market reflects the dynamic evolution of our fintech landscape, symbolising both the economic strength of our nation and the ambitious aspirations of our people. NBFCs have been instrumental in extending financial services to previously underserved areas, facilitated by factors such as increased internet penetration, a growing middle class, a tech-savvy customer base, and supportive government initiatives. Fintech lending companies, including KreditBee, have actively contributed to this trend by offering tailored products that cater to the diverse needs of our expanding customer base.
In the realm of fintech lending, the increasing prevalence of cyber threats underscores the imperative for ongoing investments in cybersecurity. In 2024, the focal point is on Regtech, which integrates AI, blockchain, and cloud computing to ensure compliance amid growing regulatory complexity. These emerging trends in fintech lending not only mark a transformative journey but also emphasize the delicate balance between innovation and responsibility. They lay the foundation for a future where finance is not only more efficient and customer-centric but also upholds ethical standards and champions inclusivity.
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Published: 06 Feb 2024, 10:53 AM IST