Digital lending beckons distant Indian towns as MF units and shares gain traction as a collateral

financialexpress.com:

Financial inclusion has been one of the primary goals that the Government of India wants to achieve through its various initiatives. Access to efficient credit on demand is one of the important factors that will help in achieving this goal.

With increased digitization aided by low-cost internet service, digital underwriting capabilities, availability of digital pledging of mutual funds & shares, robust payment and settlement infrastructure, the challenge of last-mile reach for secured loans seems to be resolved. Digital loan facilities against mutual funds and shares have effectively bridged the gap, extending economical secured credit access to people even in the smallest towns across India.

Our data showcases significant digital reach, evidenced by the creation of borrowing accounts from remote towns such as Pasighat and Bhalukpong in Arunachal Pradesh, Udhampur in Jammu and Kashmir, Kanyakumari in South India, and Port Blair in the Andaman Islands. Remarkably, this achievement was realized with a two members sales team and without the presence of any physical branches.

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Since the launch of the product in July 2022, we have had 8,000 plus accounts of loan against mutual funds and shares from around 500 plus towns and cities with pledged collaterals of mutual fund units and shares for over ₹1,000 plus crores.

We always knew top 30 cities in terms of mutual fund investments (T30) would be key territories from where most of the accounts would be created. However, data shows almost 40% of accounts are from beyond top 30 cities and towns (B30). More than 65% of these accounts are direct i.e. without any distribution partner.

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