SynopsisMost domestic fintech lenders that ET spoke with said that their business rose 20-40% month-on-month since December, when the crackdown started. Recently, Google pulled the plug on more than 500 instant-credit apps that had their roots in China and were not compliant with the central bank norms.
With Google removing nearly 500 China-backed fintech apps from its play store, home grown small lenders have seen a significant rise in loan disbursals. Most domestic fintech lenders that ET spoke to said that their business rose 20-40% month-on-month since December, when the crackdown started.
Fintech players further claimed that out of the new applications received in the last two months, nearly 40-45% were from customers that had earlier dealt with China-backed lenders.
“After the removal of such apps, several genuine Indian app players, like ours noted, a 25% rise in the applications received. Out of these applicants, 45% were those who engaged in transactions with Chinese instant-credit platforms,” said Ranvir Singh, MD, Kissht. “We have noted a 19% increase in the final approvals offered to customers. However, the approval rate has been less than expected as many of such applicants showcased poor credit-worthiness, over leveraging, and recent delinquency.”
LazyPay, the flagship fintech lending app of PayU has seen a similar trend too.
“We’ve witnessed 75,000 new users coming onto our LazyPay platform every month in 2020,” said Prashanth Ranganathan, CEO at PayU Finance. “We disburse more than Rs 100 crores worth of credit per month and inline with the growing consumer preference of digital payments, we have been witnessing a 20% month-on-month growth recently.”
Recently, Google pulled the plug on more than 500 instant-credit apps that had their roots in China and were not compliant with the central bank norms. The issue flared when it came to light that these apps were involved in alleged collection of personal data and its misuse, fraudulent and unlawful practices of physical threats and use of other coercive methods for recovery of loans.
“We have seen an increase in loan requests in the past couple of months as customer confidence in dealing with RBI-registered NBFCs have increased manifold,” said Yogi Sadana, CEO, CASHe. “Currently, we are processing close to 3,000 loan applications per day and are closing on a loan run rate of Rs 125 crore in loan disbursal since December 2020.”
After these unlawful recovery tactics came to light, the banking regulator directed Google to bring down hundreds of fintech loan applications that were live on the play store despite being non-compliant with local laws. Since then, Google launched a review exercise and placed the onus for compliance on lending applications, asking them to establish their credentials and prove their compliance with relevant local laws.
“After the action taken by RBI and Google, the market looks to be cleaned up now. Our play store rankings are back to pre-pandemic levels and I hope these China-backed apps have gone for good,” said Akshay Mehrotra, CEO, EarlySalary. “In fact, we have also created awareness among corporates so that their blue-collar employees don’t fall into such debt traps and use our services instead.”
Mehrotra added that while EarlySalary charges 2% interest rate a month, amounting to 24% annually, a China-backed app charges interest rates as high as 200%.
Madhusudan Ekambaram, chief executive at digital lender Kreditbee, said that since the clampdown on China-backed loan apps, its business has seen a sudden uptick. “We have seen a surge in demand over the last few weeks across the country, which we believe is on the back of reduced competition,” he said.