How You Can Get A Personal Loan In India In Under 10 Minutes
How You Can Get A Personal Loan In India In Under 10 Minutes Finance companies were ecstatic when the Indian government announced IndiaStack, the world’s largest open API-based platform for enabling digital infrastructure.
State-owned banks require customers first to visit a bank branch, open a bank account, and then begin a lengthy 3-10 day procedure of providing a loan with no guarantee of final acceptance. Due to a little hiccup in the procedure, the customer repeated the full loan application process.
The situation has drastically changed thanks to IndiaStack. However, digitizing banking in a country with more than 1 billion people is a difficult task, and progress has been slow.
Here’s all you need to know about getting a personal loan in India, including how IndiaStack has made the process easier for customers.
The Impact of IndiaStack on the Personal Loans Market
To obtain a loan, borrowers no longer need to undergo a completely physical process. IndiaStack includes special features that enable customers to access financial services with a button, aiming for a presence-less, paperless, and cashless service delivery.
Aadhaar, a 12-digit identity number granted by India’s Unique Identification Authority based on a customer’s biometric and demographic information, has emerged as the driving force behind IndiaStack’s financial inclusion efforts.
As a result, it’s simple to keep track of vital personal information that financial companies need when approving a loan. Data about a borrower’s identification and repayment capacity is available in real-time via Aadhaar, making it possible to offer loans based on more dependable security procedures.
How You Can Get A Personal Loan In India In Under 10 Minutes
IndiaStack uses the eKYC, which allows businesses to digitally undertake the Know Your Customer (KYC) verification process to complete a customer’s whole digital experience. Biometrics or a unique code sent by mobile are used in this process. The design uses an open API to allow Aadhaar holders to sign documents digitally.
The loan’s digital payments are made using the Unified Payments Interface (UPI), which the Indian government touts as one of the safest in the world.
These four digital services save time and money by eliminating the need for physical interaction and procurement and the possibility of loan fraud. Big banks and non-banking financial organizations are vying for a bigger share of the digital lending pie due to this.
How Can Individuals Obtain a Personal Loan?
Digital services developed by established financial companies who have reinvented their existing infrastructure and digital startups that have offered new approaches to streamline the digital loan journey for consumers have supported the government’s effort via IndiaStack.
All state-owned banks, commercial banks, and non-banking financial organizations (NBFCs) use digital services to make loans available to customers.
Customers must take certain basic steps to obtain a loan through the digital platform.
1) Select Your Bank
In addition to the 43 regional rural banks, India has 12 public sector banks, 22 private banks, 12 small finance banks, and six payments banks. Because IndiaStack is a national project, you can easily select the bank that meets your requirements.
Comparing interest rates, factoring in processing and handling costs if applicable, repayment terms and conditions, and ultimately opportunities for pre-payment of the loan and any penalties linked with it are all items to consider when choosing an appropriate bank. How You Can Get A Personal Loan In India In Under 10 Minutes
2) Determine the best interest rate
Every bank uses its criteria to determine the interest rate that consumers must pay on personal loans. To choose the greatest interest rate option for yourself, you’ll need to research. Personal loans in India currently have an average interest rate of 11-12 percent, with certain banks giving rates as low as 9.8 percent depending on the loan amount.
3) Double-check that your documents are in order.
To get a loan disbursement in under 10 minutes, ensure all of your documentation is in order. Bank statements from the previous six months, your Aadhaar card, which will have your Aadhaar number that will help verify your proof of identity and residence, and salary slips for salaried employees or proof of business continuity in the case of business owners are all required documents.
Apply once you have all of your documents in order. The application process prompts the bank to contact you via phone banking and WhatsApp banking, becoming increasingly popular as Indians link their phones to their Aadhaar cards.
Phone banking is simply the bank connecting with the consumer via interactive voice response technology (IVR), which chats with customers to resolve concerns. A consumer must make a missed call to the bank from the phone number registered and linked to their Aadhaar card to allow WhatsApp banking. The bank sends a Whatsapp text message to the customer’s phone number to initiate contact. In India, WhatsApp banking is still in its early stages of development, and most banks that offer the service have an internal chatbot to assist users.
This ensures that your request is processed quickly.
This step is crucial to getting the greatest deal. You want the bank to do the appropriate checks and approve the loan as soon as possible once you’ve applied.
You’ll need to enable online banking, often known as net banking, which allows customers to access their bank accounts using a unique account number and password. If you don’t have a loan application number, you can complete your personal information via phone banking, including your name, date of birth, and registered cellphone number.
Personal Loans in the Digital Age
Most Indian banks attempt to develop tech-enabled services to provide customers with a seamless digital banking experience.
For example, HDFC Bank, India’s largest market capitalization, has its own set of application program interfaces for safe information transmission between its systems and its customers. It has disbursed INR 115,500 crore ($15,360,185.61) in personal loans in FY19-20. How You Can Get A Personal Loan In India In Under 10 Minutes
Axis Bank, India’s third-largest private bank, announced that over 44% of personal loans would be sourced digitally in FY2020.
Pure digital financial players are also cheering this development in digital lending, believing that the coronavirus outbreak will only reinforce the case for digitizing the lending process.
With the coronavirus pandemic triggering social distancing regulations, Gaurav Chopra, CEO of IndiaLends, an online marketplace for consumer loans, says that pure digitalization of banking is finally happening in India, and all big companies are a part of it.
Due to the pandemic, he believes that lending in India will go completely digital in the next 12-18 months.
MoneyTap’s founder, Anuj Kacker, sees India as a “phygital” market with physical and digital components that he believes will become digital in the coming years.
His five-year-old company, which has ten million customers, has revolutionized digital lending by providing credit line loans. Customers only pay interest when they use the money. Aspirational Indians, he believes, will adopt computerized products sooner rather than later.
Applying for a Personal Loan Can Be Difficult
The same technology that facilitates a speedy loan procedure can also be a disincentive and is one of the leading causes of people abandoning the digital lending process.
Customers must ensure they meet all IndiaStack infrastructure criteria for a loan’s digital journey. The most important is getting your Aadhaar card and linking it to your bank account.
There are a few more critical measures to remember.
The residential address on a customer’s Aadhaar card is crucial for verification. Aadhaar can only have one address, and the journey can be completed digitally if your current and permanent addresses match. The digital journey fails when the address match algorithm fails.
There is also no way to proceed with the loan disbursement if their mobile number is not linked to their Aadhaar card. The third decline occurs when banks perform a video KYC, a requirement in India. While the use of mobile phones has increased rapidly as data rates have dropped and more affordable handsets have been available, many customers still lack a front-facing camera. In this scenario, a bank fails to complete the video KYC, resulting in a journey failure.
Hope fuel Loan Demand Will for a Recovery
India has traditionally been a savings-driven economy. India’s spending mindset evolves as money becomes more accessible and the country gains more exposure to the global consuming environment.
Indians are no longer waiting till they are in their 30s to buy a nice automobile or phone. Furthermore, because India’s debt-to-income ratio is still relatively low compared to other international economies, Indians’ chances of obtaining personal loans to fulfill their goals remain favorable. How You Can Get A Personal Loan In India In Under 10 Minutes