India Fintech ecosystem and regulation
India has become one of the fastest growing FinTech markets in the world and also ranked the highest globally in the FinTech adoption rate with China. Among important points of Fintech in India we can find the following:
- The overall transaction value in the Indian FinTech market is estimated to jump from approximately $65 billion in 2019 to $140 billion in 2023.
- India has overtaken China as Asia’s top FinTech funding target market with investments of around $ 286 million in 29 deals, compared to China’s $ 192.1 million in 29 deals in Q1 2019.
In terms of Fintech Lending, it has changed the approach of credit delivery in India through Innovative products and real time solutions. The industry has witnessed 38 per cent YoY growth as on Sep’20, despite COVID pandemic (Business Standard, 2021). Also, the digital lending market in India is poised to grow from $110 billion in 2019 to $350 billion in 2023, which will improve the share of the digital lending market from 23% in 2018 to 48% by 2023. This will make the digital lending sector as the highest penetration sector by digital channels in India (Globenewswire, 2021).
Regulation in India
The Reserve Bank of India Act of 1934 governs all NBFCs. According to its regulations, any organization providing fintech services in India will have to be registered by the RBI. According to section 45-IA of the RBI Act, no NBFC can initiate or carry on the business of a non-banking financial institution without obtaining the certificate of registration from RBI.
In terms of Peer-to-Peer the Lending Platform Directions of 2017 prescribe the lender exposure norms and borrowing limits concerning the operations of P2P lending platforms in India. Also, as of January 2021, the RBI started a working group to review digital lending activities by regulated and unregulated entities with the objective of formulating a regulatory framework for digital lending
Lending Fintech Companies in India
Some of the top Lending Fintech Companies in India are the following:
- SMEcorner: This Indian FinTech lender that helps SMEs in India meet their working capital needs with collateral-free business loans in 24 hours. SMEcorner is disrupting structural challenges of MSME lending in India by leveraging proprietary tech and data science that solves the complex SME underwriting problem. The company uses a proprietary online platform that combines machine learning, data science, and artificial intelligence to provide a seamless and fast customer experience.
- Capital Float: Founded in 2013, The Company’s core product is flexible and timely credit delivered over a seamless mobile experience. Capital Float leverages technology to deliver financial products to businesses and individuals across the country. The company has financed customer purchases worth INR 4 billion since March 2020
NBFC in India
In terms of NBFC (establishments that provide financial services and banking facilities without meeting the legal definition of a Bank.) in India some of the most popular are the following
- Mahindra & Mahindra Financial Services Limited: established in 1991 and has over 1000 branches, and a customer base of over 3 million, all over the country. MMFSL is one of the most renowned organizations and has two affiliates offering Insurance services and rural housing financial services
- HDB Finance Services: This NBFC offers a variety of secured and unsecured financial loans through a network of more than 1,000 branches in 22 Indian states and 3 Union Territories. It provides secured and unsecured loans, including personal and business loans, doctor’s loans, auto loans, gold loans, new to credit loans, enterprise business loans, consumer durables loans, construction equipment loans, new and used car loans, equipment loans, and tractor loans.
