India has a strong growth potential along with highest opportunities for alternative lending as compared to other countries in South and South-East Asia, according to a latest research by Singapore-based Robocash Group — provider of robotic financial services in the field of alternative lending and marketplace funding.
The analytical centre of international holding Robocash Group did a study to understand the growth prospects and opportunities for alternative investment in individual sub-region of Asia, Africa, Latin America - South, South-East, Central and West Asia, Latin America, and the Caribbean, North, South, East, West, and Central Africa.
The study does not include North America, Europe, Australia and Oceania, and East Asia. It also excluded Europe and other macro regions since these regions are already developed and have a low demand for alternative lending. The study said, likewise, China and the US require separate consideration as they hold a dominant presence in the macro region dynamics.
Alternative lending
The study evaluated each region on the single scale from 0 to 1. This indicator reflects multiple factors: the region’s specific traits, the attractiveness for alternative lending, as well as the current state of its development.
“Across the whole range of characteristics, South-East Asia shows the highest need for alternative lending, which is already being addressed, run a close second by South Asia,” the report said.
Alternative lending refers to any loan that is secured outside of a traditional banking channel. It includes P2P lending, Fintech among other platforms and are mostly sought after by individuals, small businesses and start-ups.
Opportunities for India
Drilling down deeper into country level data, the report said, “India features strong potential for growth of alternative lending (needs of 0.5 on a scale of 0 to 1), along with the highest opportunities across all countries analysed. India takes the largest share of the alternative lending market in South Asia - 81.3 per cent in 2018.”
The study considered population (characterised by informal employment and/or lack of access to banking services), average income in the region, and internet and smartphone penetration as the key indicators that drive the growth opportunities for alternative lending.
“Understandably, the country’s (India) characteristics are representative of the entire region. The strong potential for non-bank finance is partially realised in the previous years but remains untapped due to persistently high demand. The large pool of internet users (624 million or 29.9 per cent of users analysed across all regions) and high smartphone penetration (600.9 million, or 42 per cent of the total population of India in 2021) ensure the development of the market, both currently and in the future. Due to these factors, India takes a leading position among the countries in the considered part of the world,” it added.
The report also added that Vietnam as another country that stands for development opportunities for alternative lending due to the higher level of the internet and smartphone penetration.
“That said, India will remain the undisputed frontrunner as the opportunity for growth of non-bank financing greatly outpaces that of other countries,” it added.