Money & Banking

Aadhaar curbs may affect KYC process for payday loans: Inditrade chief

Vinson Kurian Thiruvananthapuram | Updated on December 26, 2018 Published on December 26, 2018

Sudip Bandyopadhyay, Group Chairman, Inditrade Group of Companies

Restrictions on the use of Aadhaar could make online know-your-customer (KYC) process a challenge for ‘payday loans’, says Sudip Bandyopadhyay, Group Chairman, Inditrade Group of Companies.

Inditrade (erstwhile JRG) and Robocash Pte Ltd, an established international player in payday loans, recently set up Inditrade-Robocash, an independent non-banking financial company.

Wikipedia defines payday loan as a small, short-term unsecured loan, ‘regardless of whether repayment of loans is linked to a borrower’s payday’.

Inditrade-Robocash will provide small loans between ₹10,000 to ₹50,000 to individuals for a short duration, Bandyopadhyay told BusinessLine. It plans to use PAN and video verification for KYC purposes.

Loans will be made available predominantly online with minimum physical interaction. The market size is estimated to be more than ₹50,000 crore. The company aims to be a leader in this segment within three to five years.

Loans will be for a duration of one to three months. While the base interest rate will be around 18 per cent, the actual rate will vary based on the risk profile generated by an algorithm.

Employment-age individuals, generally in the age group of 25-55 years, are eligible to apply for payday loans. The self-employed can also apply, Bandyopadhyay clarified.

There is no mandated minimum income for applying, but the loan amount will depend on the actual income. Processing fee and other charges will be ‘very nominal’, and there will be no prepayment charges. Delayed payment, will, however, attract penal interest based on market dynamics. Repayments may be made through deductions from salary or any other electronic/online medium.

Self-employed class

“Our partnership with Robocash will enable us to serve a large part of the salaried or self-employed population with low earnings and in need of finance for a short duration.” Robocash has proven expertise in large emerging markets such as Russia, Kazakhstan, the Philippines, Indonesia and Vietnam with the payday loan sector.

Its Artificial Intelligence-supported technology back-end, coupled with Inditrade’s understanding of the local market, make them ‘ideal partners’ to service this segment here.

Sergey Sedov, CEO, Robocash, said that India has one of the largest salaried and self-employed populations in the world. A relatively untapped and lucrative market, it is also a quite challenging one, he said.

Published on December 26, 2018

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