REVOLUTIONIZING CREDIT FOR MILLIONS IN INDIA

Regulatory action against predatory Chinese lending apps in India has shifted focus to utilizing the Unified Payments Interface UPI) to expand credit offerings, especially among lower-income individuals.

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India’s consumer credit landscape is a topic of debate, with contrasting views on its rapid growth and distribution. While bankers marvel at the industry’s expansion, concerns arise over its concentration among affluent urban professionals. Fintech players argue for broadening access to make growth more sustainable.

Credit cards, numbering nearly 100 million, show significant expansion, but predominantly cater to the same 40 million affluent Indians. In contrast, fewer than 13% of Indians over 15 borrow from formal sources. China, with nearly 40% borrowing, experienced a digital lending boom before regulatory actions.

During the pandemic, predatory Chinese lending apps entered India, prompting regulatory action. Currently, 75% of the credit card market is held by four major banks. However, the incremental cost of acquiring new borrowers hinders the industry’s expansion.

The Unified Payments Interface (UPI), used by 300 million Indians, has potential. While UPI users have primarily spent deposited money, regulators now permit lenders to offer credit through UPI. This opens avenues for credit expansion,especially among lower-income individuals.