The dimensional shift that has ensued
Bangalore, Karnataka -- (ReleaseWire) -- 05/30/2018 --The remarkable growth of Fintechs in the Indian lending market is certainly no secret. Fintechs have significantly transformed the whole structure that lending and credit were originally premised on. It wasn't long ago that low-income personal loans were literally non-existent. Today, there are multiple credit options for individuals with low income, particularly considering the number of Fintech companies that are serving a robust Indian credit market. The question has often been about the interest rate on available credit options (and how high-interest rates can get). Well, it is safe to say that as far as the interest goes, low-interest personal loans are a reality in the market today!
Traditional banks often have strict and not-very-easy-to-meet eligibility parameters. In fact, as for top private banks, not much has changed in the eligibility front even in the present day. A customer applying for a personal loan form a traditional banking institution, like say for instance a private bank, will have to meet numerous eligibility parameters to qualify, one of which is the income level.
Most private banks that have been popular in the unsecured credit market require individuals to meet the following basic eligibility criteria to become eligible for personal finance. Let's take a look –
Net Monthly Income
The net monthly income when applying for a loan from a private bank has to be at least Rs. 30,000 per month. In some cases, a higher income of at least Rs. 40,000 is a requirement. So as such, there are no low-income personal loans available with popular private banks, although it might seem that they are the go-to option for low-interest rate personal loans.
The minimum credit score that an individual is expected to have is 750. While traditional lenders do entertain profiles with a credit score of 700, a score of 750 (out of a score of 900) is considered safe, and more or less an essentiality to avoid rejection.
Listed and Unlisted Companies
Private Banks do not offer personal finance to individuals who are employed with a company that isn't listed in their "list of companies". Banks have a list of "listed" companies and offer loans only to individuals employed in one of these companies. Listed companies are usually those that have a high popularity quotient and are on top of the chain as far as market reputation is concerned.
Type of Residence
For a customer living in a shared accommodation, well, there's bad news – popular lending institutions do not offer loans to individuals residing in shared accommodations.
Time for Loan Disbursal
Any form of unsecured credit from a top lending institution will take at least 7-8 working days to reach the consumer, definitely not akin to turnaround times of Fintech companies.
The dimensional shift in recent times
An exhaustive observation of the current Indian market implies a few simple realities. Here goes:
Income Levels among salaried individuals
Not many individuals fall in the Rs. 30,000+ monthly income bracket. In fact, a majority of Indians earn below Rs. 30,000 per month. The market is of course humongous. Meaning, just because traditional banks have limited their customer base to individuals earning at least Rs. 35,000/month doesn't mean they're going to lose out on market share. This also highlights and stresses the importance of catering to the underserved section that top private lending institutions have left out.
Individuals living in shared accommodations
India is a country that does not boast too many metropolitan cities. With a massive youth population, several lakh students convert to professionals every year, and several move cities to find work and make a living. A situation like this would mean that shared accommodations become quite a necessity for young Indian professionals, as affordability and cost of living are crucial factors that they must weigh.
Employees of Unlisted Companies
There are several lakh companies in India that employ professionals from diverse educational backgrounds. And the irony is that top banks only have about 50 to 100 listed companies – again highlighting an underserved Indian credit market.
Small loan amounts
Another aspect where Fintechs have become a powerful force in the range of loan amounts offered. Fintech companies like Qbera offer personal finance options in the range between Rs. 25,000 and Rs. 25 Lakhs.
Even high-salaried individuals are moving to Fintech lenders as they can avail large amounts – they don't necessarily have to choose a bank for a large amount as Fintechs very well have the answer to this aspect.
Last but not the least, Fintechs disburse approved amounts in 24-48 hours. Moreover, the application is largely digital and consumes absolutely no time.
Interest rates and availing low-interest rate personal loans
The last question that becomes relevant is – if Fintechs offer so many advantages, do they do so at a higher interest rate?
Well, if the general picture is closely observed, interest rates are mostly dependent on an individual's credit score, regardless of whether he/she applies for a credit from a top financial institution or a Fintech company.
For customers who are particularly looking for a low-interest loan, it really doesn't make a difference whether they apply for it from a Fintech or a bank. Both offer low-interest loans (the interest rate is dependent on your credit score and repayment history), as the interest rate on personal loans, which generally falls in the 11% - 15% range, isn't really unaffordable for a growing Indian credit market.
All these aspects have allowed Fintechs to thrive, and fairly dislodge traditional lenders to become the primary choice for borrowers in India.
Qbera is the Fintech Company!
Qbera is a popular Fintech that offers low-interest and low-income personal loans in India. Here are some basic eligibility parameters that consumers will have to meet in order to qualify for personal finance from Qbera:
- A minimum credit score of 750
- A minimum monthly income of Rs. 20,000 per month.
- A minimum age of 23 years and a maximum of 55 years.
- A clean credit profile instances of defaults over the last 12 months.
Qbera is a leading fintech platform that currently offers instant personal loans to salaried and self-employed individuals in India through its online digital lending managed marketplace.
Qbera is mostly focused on helping traditionally underserved consumers with good credit profiles, moderate income levels, and those working with fairly unrecognised/unlisted employers, to gain direct access to fast, fair and frictionless personal loans which are delivered in best-in-class partnerships with leding financial institutions (such as RBL Bank and IndusInd Bank).