small loans: Buy-Now and Pay-Later loans help fuel India’s festive recovery

Indian consumers are scaling up buy-now plans to pay later to buy everything from washing machines to online vacations as the country’s longest holiday season kicks off.

The popularity of these small loans which typically amount to less than Rs 5,000 ($ 67) is increasing as the job market recovers from the pandemic shock. Those payments have increased by at least 20 to 30 percent in the past three months, according to fintech executives. They are expected to increase by around 66% on an annual basis in India to reach $ 11.6 billion this year, according to a Research and Markets survey.

“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-Pay-On-Pay model is the most popular source of borrowing for clients who need small loans quickly to meet their immediate cash flow needs. ”


Rising vaccination rates coupled with declining coronavirus cases are fueling optimism that people are more willing to spend on goods and jewelry this year. These consumers are increasingly turning to installment plans from retailers such as e-commerce giants Inc., Flipkart Internet Pvt. and Ant Group Co. has supported Paytm, as well as smaller fintech companies like LenDenClub, Simpl, ZestMoney, and CASHe.

LenDen saw loan applications triple to 170,000 in September from February and expects a further increase to 250,000 in December, Patel said.

More generally, credit card spending rose 54% in August from a year earlier, according to a report from Bank of America Corp.

“BNPL is helped by two things, one is the holiday season and the second is Covid, as people are more and more comfortable with online shopping,” said Yogi Sadana, managing director of the lender fintech CASHe. “We are increasing about 30% to 35% on a monthly basis, in terms of the number of loans we make each month. The support is phenomenal.

For fintechs, these loans occupy an ideal place. They are aimed at clients who would generally not be qualified to borrow from a traditional bank or who would have to wait longer than to get a loan in a few hours.

“It’s a win-win situation for all three players: borrowers who get loans quickly, lenders who get average returns of 10-12%, and us who earn 5-6% fees by putting borrowers and lenders on a common platform, ”Patel said.

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