India’s digital loan market draws the attention of global tech giants
Global tech giants including Facebook, Amazon, and Google are eyeing India’s digital loan market, which is expected to rise to a $1 trillion industry in the coming years. In the aftermath of the COVID-19 pandemic, online transactions have increased exponentially in India, facilitating an expansion of India’s digital payments market. The proliferation of online services applications across sectors boosted the growth of the digital payments market in the country.
A report by Bloomberg noted that digital lending in India is projected to grow to $350 billion by 2023 and will reach about $1 trillion within five years beginning from 2019. With this development, the lending sector can become the highest digital penetration in the Indian business landscape.
Taking note of the development, leading international tech companies have announced collaborations or planning to partner with Indian lenders to establish their position in the digital loan market. Earlier this month, Facebook announced the launch of its small business loan program in India to offer loans through a partner to those firms willing to advertise on the Mark Zuckerberg-led social networking platform.
Alphabet Inc.’s Google has tied up with small Indian lenders to provide time deposit services to its users. The company is already offering wealth management products to customers, including mutual funds and digital gold on its Google Pay application.
In addition, Xiaomi India head Manu Jain has expressed his company’s willingness to offer loans, insurance and credit card-related services to businesses in collaboration with some of the country’s leading startup digital lenders. Last week, Amazon.com made its maiden investment in the Indian wealth management sector by participating in a $40 million round of fintech startup Smallcase Technologies, along with Premji Invest, Blume Ventures, HDFC Bank and Beenext among other businesses.
“We are excited to partner with Smallcase in their journey to offer innovative consumer investment products. By increasing product selection and convenience, this will provide an additional channel for consumers to participate in the equity markets,” an Amazon spokesperson said.
Market analysts are looking forwards to a surge in the engagement of Indian consumers in the digital loan market to explore specially designed digital business experiences. In view of the growing potential of the digital loan market, the Reserve Bank of India is working on a policy to regulate online lenders which reportedly include over 300 startups.
Noting that India is home to more than 63 million MSMEs (Micro, Small and Medium Enterprises), the total addressable credit demand by the MSME sector is estimated at $490 billion by the Central Bank.