With the younger generation not very hesitant to avail credit for buying goods and services, along with traditional ways like bank loan and credit card, various new avenues are coming up to make credit readily available. Apart from credit card, buy now pay later (BNPL) etc, one of the lucrative options to get access to credit is credit line.
As the nation’s economy returns to pre-Covid levels, people venturing out for revenge travel and the ongoing wedding season, there is a resurgence of demand for credit across sectors.
To boost the demand further, the finance ministry has announced a massive nationwide credit outreach initiative worth Rs 63,574 crore to ensure credit to those who need it.
To satisfy these demands, financial institutions including fintech platforms and banks, are extensively curating creative and customised products to meet different credit requirements of the borrowers, especially among Millennial and GenZs.
Credit line is one of the new-age products that allows one to borrow money repeatedly, up to a pre-set limit, with interest payable only on the amount actually borrowed and not on the entire pre-set credit line limit.
App-based credit line facilities generally provide consumers with instant funds for up to Rs 4 lakh, which may be used to take a personal loan and/or a shopping loan etc.
As per their eligibility, customers are allowed to borrow as much as required from the approved limit and repay in flexible EMIs for up to one year. Moreover, interest is levied only on the amount borrowed, and not on the total approved credit line limit.
So, credit lines provide consumers with ready access to a personal financial reserve which can be used for emergencies, shopping or any other purpose.
Owing to the credit line’s features like – convenience, flexibility, ready access to cash, and zero interest charged on unused credit amount – it is becoming popular among the new age customers.
According to digital lending player CASHe, which has disbursed loans worth Rs 100 crore under credit line alone in the last six months at an overall growth of over 40 per cent M-o-M, the maximum demand is coming from key metro cities of Bangalore, Chennai and Hyderabad, with an average ticket-size of loans at Rs 28,000 to Rs 30,000.