Pitching to raise the current caps on small-ticket loans, NITI Aayog CEO Amitabh Kant asked digital lenders to push the limits on small loans granted through one time password-based electronic know your customer (KYC) verification with the help of technology.
At present, lending through OTP-based Aadhaar authentication alone results in higher operating expenses. It is capped at Rs 60,000, which is way lesser than loan size that happens through online digital mode Rs 3.5 lakh, Mint report quoted Kant as saying.
Supporting the digital lending ecosystem, he also talked about credit cards account opening using OTP-based e-KYC and OTP-based account opening. There should be products that best suit customers financial needs. This will provide both retail consumer and SME customer more easy access to credit, he added.
He also emphasised the need for more issuers to Digilockers, which store Aadhar details with customer consent.
To expand financial inclusion, the govt had earlier said that it will take necessary measure to bring in a more flexible regulatory environment for fintech players. In India, according to fintech trends report by PWC, there is demand for loans of roughly $200 billion from individuals and SMEs
Lending market is still underserved in India. The digital lending segment offers a huge opportunity for both borrowers and lenders. Out of 22 crore credit eligible people, only 7 crore have actively taken out loans with eligible credit score, according to an estimate.
Consumers still battle with a long queue and extensive paperwork of traditional banks to get a loan sanction. This can be solved with the help technology like data analytics and proprietary algorithms.
Of late, digital payments space witnessed a flurry of entry of new players. Recently Google in partnership with HDFC, ICICI, Kotak Mahindra and Federal Bank started providing pre-approved loans through its platform.