Are All Online Loan Apps an NBFC?

India is an emerging economy that has seen the rise of Micro, Small & Medium Enterprises (MSME) in recent times. However, lack of funding is cited as a major bottleneck in the growth of the MSME sector in the country. Though India is home to a fintech lending ecosystem, there is a dearth of lenders who are willing to grant loans to MSME and other small borrowers owing to various reasons. This has led to the rise of online loan apps in India that offer personal and business loans easily in fulfillment of the basic eligibility criteria. The ongoing pandemic has further augmented the importance of having emergency funds, which has made the presence of these online loan apps even more significant. The online loan apps are mainly NBFCs that have been authorized to operate such online loan apps by the Reserve Bank of India (RBI).

What are NBFCs and their current acceptance in India?

A Non-Banking Financial Company (NBFC) is like a bank that provides loans but cannot accept public deposits for opening savings/current accounts. However, they can receive deposits under any scheme in one lump sum through contributions or related ways. An NBFC also cannot issue cheques and drafts but can provide credit or loans to SMEs and MSMEs, helping such small and medium scale businesses get through their financial needs. NBFCs offer personal loans to small-time borrowers who require emergency cash for various personal expenditures. NBFCs charge an affordable rate of interest between 10.99% p.a. to 36.00% p.a. with a processing fee that ranges from 2% - 3% of the loan amount.

Launching loan apps via NBFCs

The digital wave has impacted the NBFCs in a positive way, with several known NBFC’s promoting digital lending platforms in India. However, RBI has mandated that digital lending platforms promoted by Banks or NBFCs are required to disclose names of such banks or NBFCs forefront to the customers availing loans from such online loan apps. NBFCs are allowed to provide collateral-free loans like overdraft, cash credit, and bill discounting, with the minimum loan amount being higher than that of nationalized banks. Also, now GST at 18% will be applicable on banking services and products provided by NBFCs in India.

How NBFC’s helped during the pandemic?

The first and the second wave of the Covid-19 pandemic has caused huge disruptions to life and the economy globally, including in India. Still, the NBFCs in India continued to provide credit during the pandemic though at a slower pace. For instance, the retail sector benefitted owing to the incremental credit provided by NBFCs. NBFCs have thus risen during the pandemic to help borrowers deal with their financial exigencies.

There are various credible NBFCs in India who provide online instant personal loans. One such innovative online loan app is SimplyCash – powered by Hero FinCorp, which is one of the fastest-growing NBFCs in India.

Key Benefits of SimplyCash app

• Instant personal loans between Rs.50,000 – Rs.1,50,000 available to both salaried and self-employed individual residents of India

• Loan approval within minutes

• Low rate of interest starting at 2.08% per month with flexible repayment options

• Borrower can customise their loan amount and tenure via the SimplyCash Loan EMI calculator available

• Paperless hassle-free documentation process and online KYC verification

• Loan approved within a matter of a few hours and directly credited to borrower’s bank account

The popularity of NBFCs in India is on the rise owing to the growth of the small scale and medium sector in India. Loan apps like SimplyCash provide the needed respite to small borrowers who require funds to tide over their financial needs.