It seems customers are going overboard in Diwali shopping this year to compensate for their inability to celebrate fully in the past two years due to various Covid-induced restrictions.
With people going all out to celebrate the festivities this year, digital lenders are witnessing a surge in the demand for small-ticket loans.
“The October to December quarter is marked by a large number of festivals in India and retail consumption swells significantly as people’s spending on items ranging from electronics, precious metals, cars etc. increases drastically. This rising consumption has a two-fold impact – first, it leads to an increase in demand for credit amongst consumers and subsequently there is increasing competition amongst digital lenders to grab the largest share of this surge in demand for loans,” said Sankalp Mathur, Co-founder & CRO, Niro.
Various deals and discounts – both from sellers and lenders – are also luring people in borrowing money to buy more.
“The entire market is inundated with large cashback offers, instant discounts and offers for pre-approved personal loans. This festive season in order to ease access to loans for people, various banks, NBFCs and digital lenders across the country are offering lucrative credit deals to their customers,” said Mathur.
“In the consumption loans space, players like Bajajfinserv are offering no-cost EMI options to their customers. SBI Yono is also offering credit to customers with zero processing fees and attractive interest rates on car, gold and personal loans,” he added.
Online stores like Amazon, Flipkart are also collaborating with lenders to attract more customers by providing additional discounts on various payment modes.
“Digital lenders are also partnering with e-commerce platforms such as Flipkart and Amazon during their ongoing festive sales to reach their expansive network of consumers,” said Mathur.
“Big banks like Axis, Citi, and ICICI are providing a 10 per cent instant cash discount up to nearly Rs 8000 on various eCommerce platforms and no-cost EMIs on some. As an attempt to ease the loan-borrowing process for consumers this festive season, we at Niro are also offering a full refund on the processing fees to some of our customers for our go-to pre-approved embedded personal loan programme,” he added.
The higher demand from customers also entourage business houses to produce more, which increases demand for business loans as well.
“We have seen the credit demand double YoY across our MSME borrower base ahead of the festive season. This is clubbed with a strong preference for digital loans among MSMEs owing to the ease, speed and accessibility that tech-led credit offerings bring to the table,” said Siddharth Mahanot, Co- founder and COO Indifi Technologies.
“At Indifi we have collaborated with digital ecosystems like Gpay, Facebook, Amazon, Swiggy etc that MSMEs leverage for distribution, payments and more. The data-led underwriting, AI/ML powered speed of disbursals, human intervention free lending process and guided end to end digitised experience makes access to capital extremely seamless for MSMEs. This becomes even more pivotal for MSMEs preparing for the festive season as they are looking for hasslefree, customised payment cycles with quick disbursals,” he added.