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Manav Jeet

Manavjeet Singh is the CEO & MD of Rubique.

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Online Lending Platforms Rewriting Traditional Lending Habits in SME and MSME Financing in India

The current marketplace for financial products in India is still highly inefficient, time-consuming & uncertain for customers – especially the SMEs and the MSMEs.

Photo Credit : theasianbanker.com,

41-year-old Sumer Singh from Hanumangarh wanted INR 3.5 lakh for setting up his traditional footwear‘s business. But instead of approaching a local bank where he would have to mortgage his house and undergo a long procedure before getting access to the money, Sumer decided to try his luck with an online marketplace lending platform. To overcome the challenges of long paper trails and rejected applications in traditional brick mortar system,  the new-age lending platforms are coming to the rescue to ensure hassle-free loan disbursements. 

The need for tech-led lending services

The current marketplace for financial products in India is still highly inefficient, time-consuming & uncertain for customers – especially the SMEs and the MSMEs. When they require loans as working capital or for expenditures like purchase of raw materials, payment towards wages etc. to achieve scale and growth, approaching a bank directly or even visiting loan aggregator websites becomes challenging in terms of time & information. Also, due to varied risk appetite of traditional financial institutions, many SME and MSME entrepreneurs are often puzzled in terms of documentation requirements; different banks and lenders have their own set of risk parameters which they assess while sanctioning a lending facility. This results in high rejection rates within the loan ecosystem.

Why online lending is emerging as an enabler for India’s MSME industry

Considering the inefficiencies and the pain points that exist in the traditional lending industry, online lending platforms are devising innovative tech-led solutions to address these gaps. Through direct integration with financial institutions’ lending systems, these platforms are focusing on disbursements in the quickest possible time while lowering the cost of customer acquisition for BFSI players & easing the right product discovery for MSMEs. 

New-age fintech lending marketplaces endeavor to revolutionize the country’s financial lending patterns by changing the way it works. They are enabling easy access to loans by connecting these small businesses to financial institutions on a consolidated platform for quicker sanctions. Such neutral platforms, with customer-centric features offering a wide range of loan products and end-to-end loan fulfillment, enable MSMEs to concentrate on building their businesses rather than worrying about finances to fulfill the gap in their cash flows or fund their expansion and growth. 

There are some platforms that emphasize on providing advisory services to MSME units and assessing their risk profiles, providing banks and lenders with highly accurate and relevant borrower information basis their risk appetites. This is done by automating the credit risk assessment processes to reduce the turnaround time for customers. These platforms also employ big data analytics to grasp the credit comfort and gauge the creditworthiness of small business owners so that loans can be disbursed in the shortest period of time.  

Technology facilitates fin-tech companies to streamline the complicated lending process, enhance speed, and improve customer experience. Thus, they are constantly on a look out for tech solutions that can make their services more accessible to a wider user base. For instance, fin-tech platforms like - Rubique are focusing right from sourcing credit till the disbursement procedure. It gets the loan applications processed faster through its advanced matchmaking algorithm. This technology intervention helps MSMEs to discover the right financial institution as per their capital requirement. The online integrations like eKYC, IRIS scan for Aadhar authentication, MCA integration, generation of credit assessment memo (CAM) along with deviations enables the credit underwriter to take quick decisioning & reduce the application processing time further. Its Online PLUS approach opens up a brilliant one-stop advantage of making informed decisions, increasing the predictability in terms of credit approval, ensuring hassle-free support without any ambiguity and rolling out an elaborate list of financial products for the consumers and SMEs. 

Post demonetization, India has become a potentially massive market for fin-tech platforms. However, if we notice the scenario of loan processing in the country, it still takes a lot of time for SME businesses to go through the entire procedure. This hampers their growth and eventually their scalability. To eliminate these barriers and enhance the country’s lending processes for smaller entrepreneurs, lending platforms are required to go beyond being mere marketplaces and become fulfillers. It is only the confluence of finance, technology, and innovation that is going to create endless possibilities and make the journey to a formal financial system for millions of Indians easier than imagined, thereby stirring a banking revolution.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house


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Online Lending Platforms sme MSME Financing

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