NBFCs, as an important component of India’s financial system, have been boosting credit inclusion among people and businesses by enhancing access and overcoming price inefficiencies through new product solutions and delivery strategies.

In terms of credit penetration among individuals and businesses, India ranks lower than the major emerging and developed nations. A healthy, expanding NBFC industry is critical to meeting the 2024 GDP target as well as moving India closer to developed nation status by improving social metrics such as employment rate, per capita income, and proportion of population living in poverty.

NBFCs have propelled credit development in unorganised sectors and in rural areas where banks / financial institutions have typically been reticent to lend, based on a strong understanding of the industry and local market know-how. Several NBFCs have developed sector-, product-, and geography-specific business models to leverage existing corporate or group capabilities. NBFCs have emerged as the preferred lender in such markets by customising products to meet client demands, improving customer interactions, and deepening customer connections.

The vast majority of individuals in rural areas are self-employed. Such locations account for a sizable proportion of MSME entities as well thereby creating a captive demand for credit. Previously, such demand was solely serviced by local moneylenders, who are gradually but steadily being displaced by formal institutions such as banks, RRBs, and small NBFCs, thereby bringing such rural borrowers into the formal credit system.

Following the epidemic, a huge number of individuals reverse migrated and stayed thereby increasing demand for credit from such places. A large percentage of such reverse migrants are also self- employed, which contributes to incremental demand in credit offtake from rural regions.

Credit demand from the rural economy is growing, but there are still challenges like as last-mile connectivity, linguistic obstacles, and a lack of organised financial information for clients in these locations.

This need was traditionally fulfilled by local moneylenders or informal sources of funding, who charged high interest rates, resulting in abuse of such borrowers. Despite considerable penetration of Banks, RRBs, Co-operative Societies, other formal Financial Institutions in such geographies, they have been unable to completely satisfy credit offtake expectations, owing to lack expertise in dealing with such client segments and regions.

NBFCs have grown in both urban and rural areas due to the fact that they are run and managed by professionals from the same areas, giving them a pulse on the credit market. More often than not, these financial institutions focus solely on enabling credit accesses for the borrowers, allowing them to entirely focus and generate a personalised touch with borrowers.

Most formal credit players and NBFCs in rural areas have smaller balance sheets and modest volumes, allowing them to have a dedicated focus and more personal connection with their borrowers. Such NBFCs also offer customised and one-of-a-kind goods tailored to a given area and community. As mostly such NBFCs run a mono-line business, the whole ecosystem is centred at servicing the specified client rather than diverting their attention to multiple products. This gives such NBFCs a community lending characteristics, which aids in marketing and expanding company in and around the region of operations. As a result, such regional NBFCs are able to comprehend, guide, and walk the talk with customers, as well as assure recovery under stressed situations.

The consumer segments served by such Regional NBFCs differ in several ways. The majority of borrowers (75 percent or more) are directly or indirectly dependent on agriculture and their income levels are seasonal and thus dynamic. These borrowers have little or no education and typically speak local language. Because of these qualities which are very well understood by Regional NBFCs, they can devote additional time and effort to ensure that their customers comprehend the products. In addition, at times of default or stress due to unforeseen circumstances, Regional NBFCs are able to understand and assist such borrowers to secure recovery, rather than resorting to industry-standard legal options. Large banks and institutions cannot engage in such methods since they have limited domain and bandwidth to spare, therefore they focus on high yield products in safer locations.

Regional NBFCs have a plethora of information about their consumers. This information can be digitised and leveraged to make intelligent lending choices and cross-sell possibilities, guaranteeing optimal resource utilisation and profits for the NBFC. As we speak, small and mid-sized NBFCs are becoming more professional, adhering to established norms and procedures and investing in staff and technology. Furthermore, such NBFCs are developing digital platforms to provide seamless and hassle-free interaction with customers in their native language in order to provide superior product and service delivery to the end customer based on analysis of available data.

Akme Fintrade (India) Limited is a two-decade old RBI registered NBFC operational predominantly in areas of Southern Rajasthan. Our company provides financing solutions required in the daily lives of customers in rural geographies. We have extended presence in rural geographies of Gujarat, Madhya Pradesh and Maharashtra. Currently, we are developing a fintech led digital lending platform offering customizable lending solutions for rural populace under the brand name “aasaanloans.com”.

Aasaanloans.com shall utilize state-of-the-art technology and the experience generated from serving customers since more than 2 decades to ensure right amount of credit to the right borrower at right time and that too digitally making the customer walk the talk and interacting with him/her in own loanguage.

The platform shall provide customized products like Aasaan Vehicle Finance, Aasaan Saral Udyog Loan, Aasaan Mahila Udyog Loan, Aasaan Farm Equipment Loan, Aasan Gruh Loan to name a few in their own language with end-to-end processing of loan to happen digitally ensuring optimal TAT with better volumes.

We are upgrading our policies, procedures and guidelines in this phase of our growth and increasingly envisage to use the digital platform to create scale backed by quality. We believe Aasaanloans.com will be able to cater to varied financing requirement of rural population and has the potential to become a meaningful player in the Indian Rural Lending Space.