Changing Personal Loan Trends in India
Analysing the growth of Indian economy in the past few decades, it shows rapid growth in the trend of Personal Loans in India. The lending and borrowing processes for Personal Loans are simpler and quicker as compared to the processes involved in other financial services. The main attractions of Personal Loans are they are multipurpose, convenient to procure and require less paperwork.
Personal Loan was not popular previously, as people used to prefer borrowing money from family, friends, and colleagues at the time of need. However, with the changing time, people have realised the benefits of availing Personal Loans. Borrowing money from friends and relatives is never a great idea considering the bond and relationship between the two persons. Thus, the need for the Personal Loan emerged in India which offers a long list of benefits starting from no collateral to low interest rate with complete safety.
A Personal Loan is considered as one of the finest solutions when it comes to the matter of emergency or any special occasion. There are many reasons for which Indians are shifting towards the Personal Loan.
Let’s have a look at some of the latest trends in Personal Loans in India:
- Using Blockchain for Secure Lending
Blockchain technology can be described as “a digital ledger wherein transactions done through bitcoin or other digital currency or cryptocurrency are recorded in a chronological manner publicly.
Blockchain was initially used for financial transactions, but later, it was used by many businesses for various purposes. Indian banks and non-banking financial companies (NBFCs) are using blockchain tracking financial transactions, put an end to the frauds and data loss, and completing the KYC process.
Regarding Personal Loans, the banking sector is using this technology for KYC for identity verification and payment settlement. Many banks have already started utilising blockchain system. For example, Axis Bank is using it for developing an inward remittance solution, ICICI Bank is working on the creation of a closed-loop wallet for within campus transactions, and SBI Personal Loan is using it for KYC or smart contracts.
- Peer to Peer Lending Platforms
Peer to Peer or P2P is one of the biggest changes in the Indian lending sector. In India, Personal Loans were only offered by limited traditional banks, but now Personal Loan services are offered not just by almost every bank, but also by NBFCs and other financial institutions and P2P lending platforms. P2P lending is a type of crowdfunding technique, used to raise as well as offer loan with interest. P2P is an online business where lenders and borrowers meet to cater to each other’s needs.
- Using Data Analytics Tools to Make Accurate Lending Decisions
Getting a Personal Loan from banks with a low credit score is not easy. Various banks are now realising the importance of accurate customer data to make right lending decisions. So banks are using data analytic tools for this purpose. These technologies will help banks to monitor the borrower’s credit history closely in a better way.
- Offering Technological Oriented Services
One of the most convenient ways of doing our work is through technology. Banks are now using various technologies for making their Personal Loan disbursement and easy process for them as well as their customers such as online loan application, documents submission, approval and disbursement; using chatbots for interaction with customers, and so on. Due to online services the Personal Loan offering by banks has been improved significantly. The borrower need not visit banks and wait in a queue to apply for a Personal Loan. They can simply visit the official website of the selected bank or online lending marketplaces and apply from anywhere in the world in just a few clicks.
With so much going on in the lending sector, the access to Personal Loans and application process for the same will be improving only.