Skip to content 
We have stopped taking loan applications
Why have we made that decision?
When we started taking loan applications from mid-2020, we did so because we had a simple but fundamental principle:
Everyone who needs and wants a loan should get the loan.
To this end, we approached various banks and NBFCs so that we can create a framework that enables people to get loans and repay them easily.
We had a vision of working towards adding tangible and measurable value to assets a small borrower can offer as collateral such as his cart (or thela), his small tea shop, his seat in the village mandi, the number of years working as a security guard or a handyman in an unregulated industry, years working as an employee in a small shop or proprietary business, etc.
Yes, some of these would need a type of framework that will allow the lender to verify personal facts or get the assurance it needs to advance a loan. But this will need some work and has to be more robust and extensive than current KYC standards.
Unfortunately, we were not successful in our discussions. The finance sector was busy dealing with the aftermath of Covid, and looking at ways for people in unregulated sectors to get loans was not a priority. We were lucky enough to get a few meetings, but they did not lead anywhere.
So, we moved away from these discussions and decided to try and get people who needed loans get the funds they required.
We soon realised that being an online website, we could only process digital loans and they come with higher (sometimes exorbitant) interest rates. This was against what we believed in. In most cases, we told our applicants to go directly to a bank branch near them and negotiate with the bank for lower interest rates – something that was not possible with digital / online loans.
There was also a rise in a disturbing trend in recent years.
The (1) financial industry turmoil from Covid and its aftermath, (2) the rise of small NBFCs and Buy Now Pay Later organisations to give micro or small loans, (3) a personal banking structure that relies on margins from loans to sustain itself, and perhaps most important, (4) the lack of any foolproof structure to assess the loan-taking ability of the small borrower, mean loans were given to those who may not need it and while those that needed it still had to rely on the unregulated lending economy, i.e. the money-lenders.
The last few years have seen bank officers approving loans to borrowers with low creditworthiness to meet sales targets. The risk was supposedly mitigated by higher interest rates or processing fees. But the rush to push sales meant the borrowers were left with EMIs that were more than their income.
This was not a good situation to be in for borrowers.
(We have lost count of how many people who called us, emailed us to consolidate their loans so their EMI can be reduced to manageable levels.)
You can guess what happened next across the industry. Defaults.
There are now a record number of defaults in small personal loans. One out of every four loans of ₹50,000 or less are witnessing defaults, says the Financial Express. The Economic Times reports an even worse situation for loans under ₹10,000.
Are financial institutions the only ones we should blame for this state of affairs? No, the borrowers were equally responsible for misusing easy funds, but this misuse would not have occurred if banks and NBFCs were responsible enough and not driven by sales figures. Borrowers either needed lower interest rates or longer tenures. But most importantly, they needed support and understanding from their lender, which they did not get.
Reading this, it may seem the fault lies entirely with the NBFCs or the smaller banks or even the larger ones.
But it does not.
The banking system in India has needed a revamp for decades. A customer-first approach with thorough empathetic understanding of customer segments and the individual borrower has become critically important. A support structure that helps borrowers repay easily and not harass them has been the need of the hour for some time now.
But the Indian Banking System does not realise this – not at the bank and the NBFC level, not at the RBI level and not at the policy execution level. Policy papers and recommendations cannot heal the wounds. It needs ameliorative action.
A larger question comes into play here: What is the effectiveness of a national-interest focused banking system that cannot care for the weaker sections of the country?
To End
We are a personal finance information initiative. We cannot solve the larger problem that faces Indian personal finance industry.
And so, we have decided to not give our valuable readers any false hope of getting a loan at manageable interest rates.
We hope to continue providing you with information on loans, investments, earning opportunities, and sometimes even opinion pieces.
