Facebook, Xiaomi, Amazon and Google Eye India’s Digital Lending Market

Companies like Facebook Inc, Xiaomi Corp, Amazon and Google are now vying for India’s digital lending market, which is expected to grow into a $1 trillion industry. These companies have already announced plans or are partnering with smaller Indian lenders as they seek to establish a foothold.

Tech giants are increasingly focusing on India’s digital payments market after online transactions surged amid the pandemic. According to a Bloomberg report, digital lending is expected to reach $350 billion by 2023 and reach $1 trillion in five years from 2019.

Facebook recently said it would roll out its Small Business Loan Program which offers loans through a partner to businesses that advertise on its platform. He said India would be the first country where he would roll out the program. The loans offered would range from around $6,822 to $68,229 (Rs 5-50 lakh approx). Interest rates of 17 to 20% will be levied, possibly without guarantee.

Xiaomi India director Manu Jain also said the company plans to offer loans, credit cards and insurance products in partnership with some of the country’s biggest lenders and digital startups. Amazon.com also recently invested in fintech startup Smallcase Technologies, in what was its first investment in wealth management. The $40 million round also saw participation from Faering Capital, Premji Invest, Sequoia Capital India, Blume Ventures, Beenext, DSP Group, Arkam Ventures, WEH Ventures and HDFC Bank.

Google has also tied up with smaller lenders to open term deposits. It already offers wealth management products such as digital gold, mutual funds on Google Pay.

Even though the biggest names are focusing on the digital lending market, it is not without risks. The country’s bad debt ratio is expected to reach 11.3% by March.

The Reserve Bank of India also plans to regulate online lenders, including more than 300 startups.

Also Read: Fintech Smallcase Raises $40M from Faering, Amazon, Premji Invest, Sequoia, and More

Priscilla C. Carnegie