The retail loan industry in India is growing rapidly. Compared to March 2021, the retail loans increased by 50% in March 2022. NBFCs are mainly responsible for this huge surge in the growth of personal lending. Issuing credit cards also grew by 13%. Lenders are more willing to increase loans and credits mainly because of the change in the credit underwriting process. From March 2021 to March 2022, ₹24 crore loan was disbursed. Traditionally, credit limit evaluation is a manual process. People looked at income slips, loan repayment receipts, and other documents to evaluate the credit limit of a person. This type of evaluation was heavily biased and based on the individual’s perception of lending. For example, two businesses in Delhi and Jabalpur would not get the same credit limit even if their income and financial status is the same. Geographical locations too played a critical role in credit limit because someone from Delhi will get a higher credit limit than someone from Jabalpur. Modern and technology-based credit evaluation approach takes the guesswork out of the process. Standardized metrics are used and numerous different financial parameters are considered for approving credit limits. Now, people in second-tier cities will also have access to higher credit limits, irrespective of where they are located. Fintech companies use advanced automated APIs to evaluate creditworthiness solely based on financial status. This has allowed financial institutions to offer loans symmetrically throughout. Credit Risk Evaluation Benefits For Banks Credit risk evaluation models that rely on historical data are inaccurate and outdated. Improved and streamlined evaluation models are the need of the hour for banks and NBFCs that are competing to improve loan offerings. Automated evaluation models can predict customer behaviors and tap into new data sources. It opens up new market segments, increasing the reach of financial institutions. Revenue increase – When the new dynamic model of credit underwriting is employed, data from multiple sources are fetched to calculate creditworthiness. Based on new models, banks can increase their revenue by 5% to 15%. This is possible by lowering the cost of acquisition, increasing acceptance rates, and offering a good customer experience. Reduce credit-loss rates – If the evaluation model can predict and pick out customers more likely to default, banks can reduce their credit losses by 20% to 40%. This can greatly help banks to improve their capital and diversity service offerings. Improved efficiency – Automated data extraction, evaluation ML models, and case prioritisation can improve banking efficiency by 20% to 40%. Low-risk cases can be processed quickly. High-risk cases are analyzed more thoroughly based on improved evaluation models. How To Implement New-Age Credit Evaluation Models? Fintech in the banking sector involves automating banking processes to create an agile environment. The best way to develop a credit evaluation model is to expand data sources and mine existing data to find credit signals. Use A Modular Architecture Credit risk evaluation varies on a case-by-case basis. Hierarchical architecture is not suitable anymore. Modular architecture for credit risk evaluation models allows fintech companies to add or remove data sources based on the creditor risk. Using this model, banks can gather financial information from multiple data sources and assign scores based on the importance of data to evaluate creditworthiness. Gather Data From Multiple Data Sources The decision-making model should have a predictive analysis capacity to evaluate credit risk. The future risk of a creditor can be evaluated using historical data. Apart from traditional data, use non-traditional and external data for underwriting. Use Data Mining To Identify Credit Signals While the data sources are useful, the true potential of credit risk evaluation models can only be unlocked with proper data mining tools. Data from multiple sources must be pulled together, compared and analysed to identify credit signals. Modern-day ML models can take incomplete or partial banking data and predict the customers’ outlook for categorisation. This helps in segmentation based on geographical location, past financial history, etc. Leverage Fintech Expertise While credit risk evaluation is crucial, NBFCs need not spend their resources building a brand-new credit risk evaluation model. They can leverage the technical and cloud expertise of fintech partners to build upon the evaluation model they already have. As the new models are modular, banks can determine the type of evaluation modules necessary based on the target market.
Month: April 2023
What are Neobanks and how do they change the FinTech market?
From the years 2021 to 2025, the global fintech market is expected to grow at a CAGR of 23.58%. Contributing to this growth is the concept of Neobanks. With the advent of new technologies and automation taking every industry by storm, the Neobanks industry is expected to grow at a compound annual growth rate (CAGR) of 53.4% from 2022 to 2030. The Fintech industry has come a long way from the traditional means of banking; now, with the advent of state-of-the-art technologies, the sector has seen a significant amount of transformations. People have become habitual to the 10-minute grocery deliveries and expect the same with their transactions. The traditional methods of banking, i.e., standing in long queues, and filling up a huge pile of paperwork, was a tiresome and monotonous task. However, with the incorporation of Neobanks, these tasks have been eliminated. Let’s understand in detail how these technologically advanced Neobanks have transformed the Fintech market. How has Neobanks changed the Fintech market? Ever since their implementation, Neobanks have made banking operations easier and focused on giving customers an overall efficient experience. In recent years, venture capital firms have paid significant attention to neobanks and invested heavily in them. Furthermore, with the various segments available on the Neobanks applications, the segment of a savings account by the year 2028 is expected to grow at a sizeable market share. Over the course of time, the Neobank platform has upgraded and launched new products as a means to alter the course of the entire fintech market. Much like the savings account service of the Neobank platform, the segment of personal application is estimated to grow rapidly till the year 2028. With the state-of-the-art technological concept and ease in banking operations, Neobanks have changed the Fintech market. However, before the advent of the Neobanks, the banking sector was disrupted due to the pandemic and other external factors. Source: https://www.finextra.com/blogposting/21843/how-neobanks-are-defining-the-future-of-banking Further, Neobanks have a significant amount of impact on rural areas. Neobanks, or digital banks, have the potential to greatly benefit rural markets that traditional brick-and-mortar banks have underserved. People living in rural areas who have to travel long distances to carry out their banking operations can reap the benefits of a Neobank. Neobanks have further transformed the whole Customer experience by implementing convenience, a user-friendly interface and an element of personalisation. Neobanks are often more agile than traditional banks and able to introduce new features and services more quickly. They also tend to focus on using technology to improve the customer experience. The increased competition among neobanks is transforming traditional banks through digital transformation. There has been an improvement in traditional banks’ apps, seamless integration of digital and in-person experiences, more services offered, and the elimination of overdraft fees. There are benefits to consumers on all levels as a result of this shift. The more competition in banking, the more exciting innovations that will emerge, the more online features and access consumers will have, and the greater financial inclusion they will experience. Financial services like budgeting apps and savings tools are becoming more accessible to traditionally underserved consumers. These tools assist customers in improving their financial health and building real wealth. Conclusion From automated services to enhanced customer experience, Neobanks have greatly impacted the Fintech market. Moreover, they can act as a key to becoming profitable entities by convincing traditional banks to invest in new-age technology and streamline processes so customers can experience seamless and swift services. In the digital age, customers have different expectations from banks, which is why neo-banks are filling the gap between traditional banks and the digital era. In the near future, they may surpass conventional banks in terms of efficiency and profitability.
The Future Of Online Banking In India
Digital banking in India is expected to grow with a CAGR of 23.1% from 2022 to 2030. NBFC growth is also estimated to hit $5 trillion in 2024. E-Banking existed as an additional service before COVID-19. However, after the pandemic, globally, the concept of Internet banking has changed. Indian banks have achieved phenomenal growth by adopting digital technologies. Banks hope to have a multi-dimensional relationship with customers to improve banking services. Upcoming Digital Banking Trends As digital banking continues to grow, it opens up new opportunities to reach the underserved market. Rural India has numerous small businesses and cottage industries that can thrive well with futuristic funding options. However, it was difficult for banks to reach out to those consumers. The following digital banking trends will bring financial services and products closer to the rural parts of the country as well: Mobile Banking According to a study, 89% of consumers use mobile banking services. Mobile wallets are also increasingly adopted by rural India due to the widespread growth of digitisation. Security is often a major concern for mobile banking users. Mobile banking has reached 5X growth compared to online banking. Mobile banking will gain even more popularity as the number of millennials and Gen Z customers increases. Emerging Trend Of Neobanks Neobanks are growing at a rapid pace in India. These neobanks operate digitally without any physical branches. They are great alternatives to traditional banks, offering innovative products and reaching out to underserved markets. Due to RBI regulations, Neobanks partners with traditional banks to extend customer services. BaaS The banking As A Service (BaaS) sector is causing major disruption in the fintech industry. Instead of building every service from scratch, it is much easier for NBFCs (Non-Banking Financial Companies) to set up Neobanks using the BaaS platform. The neobank technology stack can be customised according to the goals and needs of NBFCs. Partnering with a BaaS provider such as Niyogin, neobanks can offer services using the APIs. They can build on the infrastructure platform already complete with rails that can easily connect with rural customers. Innovative Technologies According to Insider Intelligence Survey, 66% of banking professionals believe that newer technologies such as Artificial Intelligence (AI), blockchain, and the Internet of Things (IoT) will positively impact banking by 2025. AI is now widely used in credit risk evaluation, customer authentication, and customer support. Blockchain technology will also help financial institutions cut down middlemen and reduce operational costs. Challenges For Future Digital-Only Banks Currently, RBI has a strict regulatory framework for digital banks. Digital banks must comply with liquidity standards and capital adequacy similar to commercial banks. Initially, these banks can get a restricted license, and after proving their efficiency, they can upgrade their license. To avail of digital banking services, customers need computer literacy. This is one of the main challenges for digital banks interested in providing services to rural India. Also, the need for secure banking services is also on the rise. The digital banking platform market is expected to reach $1485.5 million by 2028, from $776.7 million in 2021. Currently, 26% of Indians have a digital bank account, which is expected to grow in the future. RBI is also creating a closed sandbox environment for digital banking services. The budget has also carved some space for digital bank units, which is a clear sign of progression for the Indian banking sector. A fintech partner like Niyogin will help banking institutions easily transition from legacy systems to modern and advanced banking technology for futuristic customers.
Introducing Supply Chain Finance
Supply Chain Finance (SCF) is a technology solution that lowers financing costs for buyers and sellers. It tracks invoice approval and settlement and automates transactions to improve the efficiency of all the parties involved in a sales transaction. The supply chain financing market is expected to reach a CAGR of 17.1% by 2024. According to Mckinsey reports, SCF eligibility will increase from less than 40% to as much as 80% in the upcoming years as supply chain leaders are looking for better solutions. By 2031, the supply chain finance market is expected to reach $13.4 billion. Indian Supply Chain Financing Ecosystem Challenges Compared to global trends, India’s supply chain financing (SCF) is still nascent. Indian MSMEs employ more than 11 crore people and contribute 29% of the GDP. Also, 70% of MSMEs require working capital funds. However, SCF remains inaccessible due to the legacy banking systems. Many MSMEs don’t meet the banking requirements criteria. The estimated credit gap is Rs. 20-25 trillion. This credit gap forces the MSMEs to approach third-party lenders, which results in higher costs, stunted growth, low profitability, and a volatile business model. The COVID economic disruption doesn’t help either. The low-cost SCF option provides extended financing for MSMEs and helps lenders manage credit risks. Source: Allied Market Research According to the new Factoring Regulations Act 2011, more than 182 NBFCs can now offer factoring services. Previously, NBFCs could meet only 20% of the funding requirements for MSMEs. Digitisation Is Paramount To SCF Innovation Digitisation is the key to achieving seamless SCF solutions for Indian MSMEs. Businesses will have access to more customised SCF products that help increase the working capital. Apart from invoices, businesses can benefit from other fintech offerings such as a letter of credit, import and import bills, shipping guarantees, performance bonds, and more. Technology innovations such as fintech digital delivery, industry utilities, API technologies, and blockchain bring supply chain financing closer to SMEs. With the non-availability of credit history, lenders can use AI-based risk assessment solutions to evaluate creditworthiness. Such solutions also predict business growth, enabling lenders to offer SCF financing. Source: PWC Fintechs can bring about innovation in SCF solutions in the following ways: Incorporate API-enabled services using a customer-centric tech stack. Use data to understand supply chain networks to innovate new opportunities. Use blockchain-distributed ledgers to improve the transparency of the financing platform. Introduce innovative products such as CAPEX discounting, invoice discounting, warehouse receipt finance, dynamic discounting, early cycle discounting, and SCF securitisation. Various initiatives from the Government of India encourage SCF. The fintech platforms can use the existing rails to improve their SCF offerings in the following ways: Leverage TReDS and GSTN linking to understand MSME cash flows for invoice financing better. Use the AA framework to provide financing options for suppliers and buyers. India’s addressable supply chain market is estimated to be Rs. 60,000 crores, while the total market value is Rs. 18 lakh crore. Digital supply chain solutions facilitate fully trackable transactions to seamless trading between buyers and suppliers.
7 Types of Risk Management You Must Know About
The COVID-19 pandemic has caused major disruptions in banking operations. Consumers have become more demanding and so, risk management must be robust. According to leading banking professionals participating in the Deloitte Banking Risk & Regulatory Academy, financial institutions must focus more on credit risk management. The banking structure must restructure and be prepared for forbearance. Apart from commonly known risk management strategies, leading banks also focus on Environmental, Social, and Governance (ESG) by improving data management strategies and analytics. Moving to the cloud is the next inevitable step to navigating complex risks and ever-changing regulatory requirements. Types Of Risk Management Risk in the banking sector refers to unplanned incidents with major financial consequences, such as reduced or lost earnings. Risk management involves establishing a series of protocols and multi-step procedures that can precisely and accurately mitigate risks. Risk management planning should help financial institutions to recognise threats, assess the damage, and take control measures to prevent risk and minimise the damage. 1. Liquidity Risk Management Banks must safeguard long-term asset funding using short-term liabilities. Funding risk for banks increases when the net outflows increases. This can be due to the non-renewal of different types of retail and wholesale deposits or unexpected withdrawals. Funding institutions must also be prepared to deal with time risk when the expected fund inflows are delayed. Risk management is essential when the non-performing assets increase. Call risk happens when contingent liabilities crystallise, and no viable business opportunities are available. 2. Interest Rate Risk Management Determining the right interest rate that is beneficial for the banks and also for the customers is always challenging. NBFCs that offer lower interest rates to beat the competition must be careful because the adjustments must not result in reduced Market Value of Equity (MVE). The interest rate risks can affect the banks’ earnings and the economic value of the off-balance sheet. 3. Market Risk Management Market fluctuations can lead to market risk when the mark-to-market value of trading portfolios goes down. Also called price risk, the market risk can dramatically increase when the transactions have to be liquidated. Different factors, such as volatility in commodities, equities, currencies, and interest rates, can influence market risks. 4. Credit Risk Management As NBFCs try to capture market share by disbursing more loans to underserved markets, their credit risk increases dramatically. The NPA level of the Indian banking system is high. When the borrowers fail to fulfil their obligations, the counterparty risk and country risk for banks increase. Loan portfolio management and detailed evaluation of borrowers are crucial to managing credit risks. 5. Operational Risk Management Banks risk a huge financial loss when internal processes and systems fail. Global financial links have increased as the banking and financial sector adopt automation. As a result, the potential for operational risks also increases. Transaction risk can result in failure in business continuity. Compliance risk can affect the integrity and credibility of banks. 6. ESG Risk Management ESG risk is the new age risk for financial institutions as they have to comply with inclusion and diversity policies. The pressure from multiple governments to contribute to climate change policies also affects investment value for the banks. Proactive risk management using models that integrate ESG and climate data must be used. 7. Reputational Risk Management In the highly competitive banking sector, reputational risk can result in a loss of trust by customers and stakeholders. This risk can be caused by poor customer service, corruption, and fraud. Banks can prevent class-action lawsuits and other punitive damages with proper reputational risk management. Mitigate Risks With Risk Management Framework Banks and financial institutions must build a robust and scalable risk management model. The framework should include all risk parameters with adequate risk grading. The framework should be updated continuously based on updated risk tolerance levels. The model risk management framework must be built into banking operations for effective risk mitigation.
Why You Should Look Beyond Banks For Your Financial Needs
Parting from traditional brick-and-mortar banking, there is a paradigm shift in how banking is done. Today, banking is also about value addition to the customers and serving their financial needs. And that is what Fintechs does! A survey revealed that 53% of respondents from the banking sector are customer-centric 53% of respondents from the banking sector are customer-centric as compared to 80% for Fintech. In 2018, around 70% of senior banking executives revealed that collaborating with big techs and Fintech was a great opportunity for banks. So, how can new-age banking be fruitful for our business? New Age Banking with Fintechs Fintechs are changing the definition of banking. Let’s see some new-age banking services that Fintechs offer: Lending Due to Fintech lending applications, India’s digital lending sector is expected to grow from $9 billion in 2012 to $350 billion in 2023. Going by the figures, there has been a tremendous boost in retail loans, especially the small ticket size loans. Retail lending grew headstrong with an 18.10% year-on-year growth. Facilities like Buy Now Pay Later (BNPL), no-cost EMIs, etc., by Fintechs promoted retail lending. The BNPL market is expected to grow to Rs. 7 lakh crores by 2026. Payments Online transactions increased during Covid-19 mainly through UPI transactions. Fintech companies allow smooth money transactions with efficient payment gateways. International money transfer India is one of the largest recipients of remittances; it received $87 billion in 2021. Doing international money transfers through traditional banking means filling up a form, submitting the same, getting the service enabled, and then conducting the transaction. Conversely, with Fintechs, we need to link our bank account with the wallet, and there we go! Personal Finance Personal finance is more than just saving and investing. Fintechs are educating customers to help them make financially informed decisions. Fintech applications are today’s financial advisors. Equity financing Fintech firms have made it easier for business leaders to raise funds. Some are directly connected to accredited investors, whereas others consider using crowdfunding models to start the fundraising process for any business. Types of Financial Products Here are some key financial products that drive Fintechs’ growth: Crypto: Blockchain is the future. NFTs, cryptocurrencies, and crypto coins are getting popular. Fintechs are developing ways to integrate them with everyday finance. Insuretech: Technology is revolutionizing the insurance industry. Insurance is no more limited to premiums and claims. Value-added services like chatbot support, doctor-on-call, telemedicine, etc., are attracting more customers than ever. Regtech: Technology also ensures compliance with regulations. Return filing is getting automated. Fintechs are ensuring timely compliance with laws by providing various products to businesses and people at large. Stock Broking: With Fintechs, we can invest in multiple asset classes from a single platform. Discount broking firms have attracted a large number of investors to stock markets. Plastic Money: Apart from credit and debit cards, plastic money includes slice cards, prepaid cards, forex cards, etc. Final Words Financial products and services can extend to many other types, but their basic functions are similar to the ones described in this article. And with the right combination of financial services and products, we can easily cater to all your financial needs. Niyogin is a leading Fintech revolutionizing the way people bank. This new-age neobank aims to power the MSMEs through Rural, Urban, and Wealth Tech solutions. From allowing retail outlets to provide financial services to fully digital credit access to MSMEs, it is driving the digital lending space to a new level. It also assists businesses and people in financial planning and wealth management! Have you partnered with Niyogin?
Financial risks involved in running a business
Starting a business requires consideration of multiple factors. Often, when starting a business, we are clear with the industry and product and also research a lot about competitors and substitutes available in the market. But often, we end up neglecting the financial risk and end up learning about financial risk the hard way. Wouldn’t it be better if we are already aware of the financial risks that businesses pose and proactively plan to mitigate them? Let’s understand the financial risks that businesses pose. Major financial risks for businesses When starting up a business, we should be wary of the following financial risks: Credit Risk One of the most common ones and quite recurring. Businesses often fall prey to credit risk whereby their debtor becomes incapable to discharge its dues. Money gets stuck, and it often takes a long to recover the dues from such debtors. Customers defaulting on payment has a very adverse impact on the business, especially when the customer is a biggie. Therefore, it is important always to keep credit risk into consideration while starting a new business. Market Risk Changing the marketplace often poses a significant risk for businesses. For instance, with the advent of online shopping, traditional retail businesses witnessed a huge blow. Customer needs and preferences change, technology evolves, and therefore, it is important for businesses to adapt to the changes and stay relevant. The businesses that shifted online with the advent of technology survived and thrived while others struggled. If we fail to adapt to the changing circumstances, then it could be a huge financial blow to our business. Liquidity Risk Businesses may face a liquidity crisis. One of the prominent reasons is the delay in receiving payment creating a working capital gap. Another significant reason could be a huge investment, thereby creating a temporary liquidity crisis. What’s important is to subside this liquidity crisis as soon as possible otherwise, we can default in payments to our creditors and other stakeholders and face a loss of goodwill. Businesses often resort to working capital loans in order to mitigate liquidity risk. A working capital loan streamlines cash flow management and better liquidity among businesses. Operational Risk Operational risks involve the risk arising due to the daily operations of the company. This could create challenging situations and create financial pressure. Operational risk normally includes fraud risk, lawsuits, business model risk, personnel problems etc. Therefore, it is important to keep operational risks into consideration, especially when making any major decision. How financial risks can be mitigated? It is important to mitigate the financial risk for a business to survive and thrive. Following are the best practices we can adopt to mitigate financial risk: Understand the Risk: What is the major financial risk that our business faces? We should study our industry to know the major financial risks that could possibly arise for our business. Close the Working Capital Gap: Most businesses prefer going for working capital loans to mitigate liquidity risk. This ensures timely payment to creditors despite a longer credit period for debtors and lowers stock turnover. Leverage Financial Technology: It is important to leverage financial technology in our business. Put in place efficient payment gateways, use financial products like insurance to reduce operational risks and outside liabilities, take advantage of software that enhances our visibility into our business and consults financial experts. In a Nutshell Financial risks, if not mitigated, could be a reason for the closure of our business. However, if we take active measures and plan proactively, then we can mitigate these risks to the maximum. Fintechs are providing financial services that are helping businesses grow and prosper like never before. Niyogin is one of the leading Fintechs that is revolutionizing access to digital credit, especially for MSMEs. You can avail yourself of working capital loans or any other financing facility to mitigate the financial risk. Further, the Wealth Tech solution ensures a proper financial plan for businesses. Have you partnered with Niyogin?
Disrupting And Democratizing The Indian Finance Ecosystem
FinTech 2.0 – The era of FinTechs begin! Industries are parting ways from traditional banking and entering the era of financial inclusion. With this, FinTechs are rolling the financial solutions with strategic partnerships and innovative features. Financial democratization is one of those changes the economy needs. Also, emerging FinTech companies are increasingly gearing towards this with the help of disruptive technologies. People access financial services either through financial entities directly or through finance professionals. This is where Niyogin is bridging the gap. It ensures greater access with its innovative credit and wealth solutions. It’s time to democratize the Indian finance ecosystem so that no one’s left without financial services. Economic Democratization and the Indian FinTech Ecosystem The financial services sector aims to create more wealth through savings and investments. But earlier, the focus had been on a few clients with a stronghold in the industry, compared to emerging ones. It was done to achieve higher growth and stability. As a result, the services were limited to high-profile clients. This creates a bias. Penalizes the poor or the weaker economic sections with high overdraft fees. Monopolizes financing capabilities to new and emerging companies and technologies to venture capitalists in a better position. This also resulted in not paying much attention to, or completely ignoring, inputs from emerging but potential financiers. Prevents emerging and potential investors from enjoying the benefits of financial inclusion. So, there is a need for financial democratization. The FinTech ecosystem offers many opportunities to speed up transformation. The FinTech industry harbors many technologies. These act as a significant driving force to achieve the goal: Advanced AI systems. These collect and analyze big data required to find and target relevant opportunities. It also helps to deal with setbacks. APIs to integrate multiple services. Digital payment platforms that make transactions hassle-free and less expensive. Advanced systems and platforms with end-to-end support. It improves monitoring, auditing, and assessing methods. The Role of Niyogin in Financial Disruption and Democratization FinTech startups develop innovative and efficient financial services. These act as catalysts for transformation. They also need to take note of the regulatory frameworks instated to protect consumer interests. Since FinTech is vital to a growing economy, these companies must find ways to bring forth innovative platforms without disrupting existing regulatory policies. Further, FinTech is becoming a one-stop solution for multiple financial services on a single platform. Consumers can now experience end-to-end services on one platform. Thereby, Niyogin is creating an ecosystem of services. The new-age FinTech startup, Niyogin, has developed various solutions. It has enabled the MSME sector to acquire and harness resources without disturbing existing financial regulations. As a premier emerging FinTech startup, Niyogin’s solutions span the entire economic spectrum for MSMEs. It covers aspects like financial inclusion, investments, credit, etc. Also, Niyogin helps integrate businesses with technologies like SaaS to create unique digital distribution networks. The FinTech company has brought forth three innovative platforms: Financial Inclusion As a platform redefining financial inclusion, íServeU allows local retailers and distributors to adopt digital systems to offer financial services in rural areas. By impaneling 2.5 lakh Kirana stores, the server has provided services to individuals from 25,000 villages. Examples of such implementations include DMT portals for cash deposits and withdrawals, banking inquiries, Aadhaar-enabled payment portals, airtime recharges, and bill payments. Credit Solutions Niyogin’s state-of-the-art credit solutions offer MSMEs easy and fully digital access to credit lines via large financial distribution networks comprising banking and NBFC professionals and product partners. Wealth Solutions Moneyfront is a premier InvestDirect-powered wealth advisory and analytics platform that offers investment and financial advisory services using a fully automated comprehensive portfolio approach. Moneyfront’s algorithms profile clients and suggest viable investment plans, depending on investor personas. Therefore, Niyogin offers different services and products in a single platform. It allows customers to access all their financial needs at a single doorstep without the need to go to different lenders and financial service providers. It doesn’t matter whether the customer is situated in rural India or urban India, Niyogin caters to the needs of both. Final Thoughts FinTechs have managed to serve the unbanked and underbanked populations. The Indian FinTech market is expected to reach $150 billion to $160 billion by 2025. Further, digital finance is expected to increase the GDP of emerging economies by as much as 6%. Niyogin is a unique, early-stage, and fully integrated neo-banking platform. It is a public-listed FinTech startup hoping to deliver disruptive, impactful, and innovative banking and financial solutions that can power MSMEs in urban and rural India. The Indian startup ecosystem is thriving with opportunities but lacks a platform that can help tap into its true potential. Niyogin’s holistic, technology-first products offer the resources that MSMEs need and the trust of a highly integrated partner network. So, are you in it to help the emerging FinTech player achieve its goals? If so, do your bit by harnessing the power of Niyogin’s platforms today!
Can Indian SMEs sustain an economic downturn?
Introduction Small businesses, from Kirana shops to neighbourhood businesses, are essential to India’s economy. But despite their significance, these small-scale enterprises lack funding. According to research by the Asian Development Bank (ADB), one solution is to build a credit-information infrastructure for small and medium-sized businesses (SMEs) and offer credit guarantees to make it easier to receive financing. It is not common for SMEs to maintain audited accounts and financial statements, which are necessary for evaluating financial health. To compensate for the additional risk to creditors, lending to SMEs will need more collateral and higher interest rates. The creation of SME credit risk databases, credit bureaus, and credit ratings can assist lenders in determining the risk involved in offering loans to small businesses. SME contribution to financial inclusion and improvement For several reasons, SMEs appear and develop on their own in a wide range of marketplaces across countries. An economy benefits in numerous ways from its emergence alongside population increase. They can support decentralized economic growth and balanced regional development since they are dispersed across rural and semi-urban areas. This, in turn, has the potential to reduce rural-urban migration significantly. It can facilitate labor re-migration from urban to rural areas during periods of unprecedented economic catastrophes. COVID-19’s effects on Indian SMEs Due to their size, the scope of operations, and accessibility to funding, SMEs have been one of the most susceptible sectors during the pandemic. Studies and polls revealed that the nationwide lockdown implemented in April 2020 had a detrimental effect on about 95% of businesses, with 70% of operations affected until August 2020. According to statistics, approximately 40% of firms experienced service interruptions until end-February 2021, even after the gradual lifting of the lockdown. Market accessibility, overall productivity, and access to more funding are the three main obstacles SMEs must overcome. Compared to the 46% decline experienced during the nationwide lockdown in 2020, an average 11% decrease in the business volume of Indian SMEs was observed in 2021. Troubles SMEs face Lack of Resources – SMEs in India are substantially disorganized. Most of their transactions are carried out in cash and are not adequately recorded in accounting records. These companies struggle to obtain business loans from the formal sector without reliable transaction data, which prevents them from receiving the required credit score. Risk perceptions – Most banks view SMEs as hazardous customers without good credit scores or collateral. SMEs have distinct financial needs depending on the size of the company, the cash flow pattern, and vendor engagements. When a start-up client is involved, this issue becomes more serious. Even if banks are persuaded to give out loans, the interest rate will be greater than usual. These peculiar challenges warrant customized services provided by one-stop fin-tech companies like Niyogin. The Next Steps SMEs must evaluate their financial situation and security at the earliest. They must re-plan their total value proposition by enhancing product quality, bolstering distribution channels, and utilizing cutting-edge advertising techniques, among other things. A robust digital ecosystem must be built to expand market outreach among buyers and providers. The benefit of financial management to a company is that it examines and comprehends its profit. Make judgments on pricing and inventory planning. As you decide whether to purchase assets, consider if the company has enough cash flow to support operations. A small firm may be led to sustainable growth with a financial strategy. The government may step forward in the future to offer soft loans with a longer repayment term and enhanced credit limits to boost SMEs during the pandemic crisis. However, until then, companies like Niyogin provide tailor-made products to suit business needs in both the short and long term at favorable terms and conditions.
The Small Business Finance Problem
Starting a business is easy, but it is tough to execute operations smoothly. There is immense competition nowadays as it has become necessary to ensure that your business is technically and technologically advanced. Especially when you are running a small business, you must fight against all odds, overcome all the financial challenges, and efficiently meet all the working capital requirements. We help you find investors in starting a business Every business owner does not have access to sufficient funds. Due to this, many small business owners face a financial challenge in maintaining an adequate cash flow. It becomes difficult for them to cover the company’s monthly bills or overhead expenses. So we Niyogin, offer assistance for the same. To meet the short-term working capital requirements For small business owners, liquidity is a significant financial challenge. Another financial challenge a new business owner faces is raising sufficient funds to run business operations efficiently and meet the working capital requirements. They are not able to evaluate the exact financial need to create a company less experienced. This is where Niyogin steps in to empower small businesses to achieve their visioned growth. We help you in sticking to a budget Another common challenge faced by a small business owner is budgeting. Small businesses need to stick to the planned budget. But sometimes, sticking to the scheduled budget becomes impossible due to financial emergencies. The reason is that small business owners’ sales and revenue are volatile. Nothing is defined in a small business. How does Niyogin help Small Business Owners to Overcome Economic Challenges? Niyogin FinTech Limited is a known non-banking finance company that offers financial assistance to micro, small, and medium enterprises. It is a Maharashtra-based company established in 2018. It was established with a vision to make our nation financially inclusive by offering quick financial assistance to MSMEs. Our mission at Niyogin is to provide financial aid to small business entrepreneurs. We want to deeply understand and solve small business owners’ real challenges in running a business. Niyogin aims to offer collateral-free access to credit as every business owner cannot offer collateral against a loan, which significantly hampers business operations. Niyogin understands that cash flow is the lifeblood of small business owners. By following the best of technology, we offer a holistic platform embracing the entire rural to developing urban MSME landscape providing credit, investments, financial inclusion, and SaaS services as a unique partner. Equipped with the best technology Niyogin plans to turn Kirana stores into financial kiosks by offering proper financial assistance. Niyogin uses the right technology to analyze the creditworthiness of loan applicants that are small business owners. Based on that, it helps them to cope with their financial obligations. How Does Niyogin work? Niyogin works in collaboration with product partners, BC agents, and BC partners in one place to provide financial assistance. Products are Aadhaar-enabled payment systems. Niyogin rural tech platform empowers its stakeholders by offering: Providing financial assistance in the deepest of rural areas Help in increasing the income of retailers Keeps a customer-centric approach Digital delivery Offers collateral-free loan Whether small business owners are looking for working capital, financial assistance for any small projects, or funds to expand their business operations, Niyogin delivers timely access to credit to small businesses at the best business loan interest rate and offers flexible tenure.
Niyogin’s vision for a more inclusive financial system in India
Niyogin FinTech Limited, established in 2018, is a non-banking finance company that offers financial assistance to micro, small, and medium enterprises in India through its holistic platform. This platform is designed mainly for mall business owners and aims to deliver collateral-free access to credit. Business owners cannot always offer collateral against the loan, which hampers business operations. What sets Niyogin apart from its competitors? These are the main factors that set Niyogin apart from other companies: Trust Reliability Quick adaption to changing market dynamics Honesty Integration with application programming interfaces (APIs) About Tashwinder Singh The CEO of Niyogin, Tashwinder Singh, joined the company in October 2020. He has in-depth industry experience spanning the Indian market and is an expert in due diligence, investment banking, and creating principal investment strategies for asset management. Plan of action for Niyogin How will Niyogin accomplish its business goals? CEO Tashwinder Singh says that Niyogin is equipped with an experienced and dedicated team that helps small business owners easily meet their working capital requirements. Niyogin uses the best data, technology, and analytics to check the creditworthiness of its borrowers. Mr. Singh adds that Niyogin’s core is planned to become a world-class financial assistance platform with a robust tech infrastructure to meet the lending needs of small businesses. CEO Tashwinder Singh says the firm will accomplish its mission through efficient access, diligent monitoring, effective origination, and by setting a market-based framework. Mr. Singh aims to pivot the business towards the neo-banking sector to democratize finance and serve the underserved or small segments of the Indian economy. About neo banking Neo banking is currently one of the emerging evolutionary sectors in the banking world. Neo banks are a kind of digital bank with no physical branches at all. Following the advent of the Covid 19 pandemic, neo-banking has become necessary. Unlike traditional banks, these lenders offer online money transfers and quick financial assistance. Whether small business owners are looking for working capital, financial aid for small projects, or funds to expand their business operations, Niyogin delivers timely access to credit to small businesses at the best interest rates and flexible tenures. Conclusion In the MSME sector, Niyogin is one of the most robust financial platforms currently available. It is known for having the most acceptable revenue-sharing models. The firm operates using a hybrid model, and its primary target audience is retail stores in rural areas. Niyogin recorded 18% sequential revenue growth and touched almost Rs. 2,000 crores in gross transaction value in the current quarter. According to its CEO, Tashwinder Singh, the company has validated its business model and is planning to invest incremental capital. The firm is also planning to win recognition for offering its partners the best holistic support system.
How digital banking is powering financial inclusion for rural customers and MSMEs
India has one of the most comprehensive financial ecosystems in the world. Yet, lack of access continues to be a challenge for a large portion of India’s 138 crore population. Traditional players in the market cannot provide relevant products and services to various segments of consumers due to multiple reasons. Digital banking plays a transformative role in bridging the gaps and enabling the financial sector to focus on underserved segments. In this blog, we delve into ongoing challenges as well as the innovative solutions that platforms like Niyogin are bringing to the table. But first, let’s understand the key challenges. Key challenges in the financial services sector Lack of access:Several consumer segments, such as individuals living in remote and rural areas, remain underserved. It is due to the lack of penetration of financial products and services in their locations. Lack of affordability: There is a high cost to running operations by traditional brick-and-mortar banks and financial businesses. Hence, the cost of services is also high and unaffordable to several segments. Lack of customization: Consumers have diverse needs, and a one-size-fits-all approach does not work when it comes to financial inclusion and opportunity. For instance, Medium, Small, and Micro Enterprises (MSMEs) have unique needs compared to corporations. Hence, the relevance of products matters. How Niyogin reduces friction and delivers value Digital banking platforms, such as Niyogin, are continually innovating to optimize current opportunities and achieve financial inclusion goals. A comprehensive ecosystem At Niyogin, we have adopted a neobank platform infrastructure approach to bridge existing gaps. We are building a comprehensive ecosystem that delivers a spectrum of credit, financial inclusion, investments, and SAAS services to serve MSMEs and rural consumer needs. A partner-based model To solve the complex issue of affordable access, we have partnered with a network of stakeholders at various levels. Here is a snapshot: We have enabled the creation of virtual banks through partnerships with Kirana stores/ shops in rural/ remote locations. Our network of financial advisors/ wealth managing professionals delivers financial advisory services to individuals and enterprises. Our bank and NBFC partnerships power credit solutions for MSMEs. Our business model enables partners to generate income while distributing critical services and products through their networks. Alternatively, they can leverage tech stacks to launch and scale their businesses, thus making it a win-win for the various stakeholders. Tech-enabled solutions Ultimately, technology is the backbone upon which we bring scalability to our business model. We have invested in building robust tech-enabled solutions for our partners. For instance, our rural tech product stack enables shop owners to turn their stores into virtual financial kiosks. This helps them generate an additional pipeline of income. Through this intervention, their customers can additionally access micro-ATMs and payment and recharge services. They can also make domestic money transfers and purchase credit and micro-insurance products. Our wealth tech stack comprises a machine learning-powered analytics services product for wealth managers of large enterprises. It is a one-stop digital platform for financial advisors looking to build their practice and a SaaS-enabled tech platform to support financial consultants serving MSMEs. In conclusion In 2022, the International Monetary Fund projected that India will become a 5 trillion dollar economy by 2026-2027, provided it stays on the growth path. At Niyogin, our mission is to revolutionise financial services for India’s rural customers and the MSME sector. The financial services sector has long underserved these two segments. As MSMEs access relevant financial products and services at scale, this sector will be in a critical position to trigger economic growth. Ultimately, it will enable India to achieve its coveted 5 trillion dollar economy status as predicted.
The Growth of Niyogin
Introduction: The Information Interface India P Ltd, promoter of Niyogin, acquired a BSE listed NBFC – M3 Global Finance Ltd, and rechristened it to Niyogin Fintech Ltd. Post the acquisition, the company raised equity capital of Rs 235 crore from Institutional Investors to drive its growth as a Fintech company. Its objective is to cater to the evolving needs and realities of the MSMEs in India. The Fintech company is building a Neobank platform that will serve the MSMEs by providing credit, financial inclusion, investments and SAAS services on a single platform. Acquisition Route to Fuel Growth Niyogin has embarked on a vision to help the MSMEs, which have remained underserved or unserved across financial products and technology. In alignment with its vision, Niyogin aims to expand its reach to the under-penetrated territories in India and drive financial inclusion. About four years back, the credit segment was launched to meet MSME needs in urban India. The small ticket unsecured business loans were offered to MSMEs and focused on accessing the market by engaging finance professionals. In addition, Niyogin adopted an inorganic route to fuel growth when it acquired Moneyfront in 2019, bringing in a Wealth Tech segment to enhance the product stack in urban India. The following year, it acquired another company, iServeU, where it added the Rural Tech segment, giving them access to under-penetrated rural India. Product Basket Credit Products: Unsecured working capital advances, small duration loans, and secured loans. Some of these secure products could be of third parties not forming part of the balance sheet. Wealth Tech Products: This platform could be directly accessed by individuals to help them in financial planning. SaaS B2B Platform: The finance experts can use this platform to offer wealth management services to assist MSMEs or MSME owners. Wealth Analytics Platform: The finance experts get insights from analytics for their clients, and individuals could also access the platform for financial planning. Rural tech Platform: It enabled Direct Money Transfer (DMT), Micro ATM (mATM), Aadhaar enabled Payment Services (AePS), and Bharat Bill Payment System (BBPS) services in rural areas. Revenue Model Niyogin generates revenue from interest as well as fee income. The fee income is generated from the commission, licenses, and cross-selling products to MSME clients using finance professionals’ services. Partnering finance professional earns one-time setup fees for using the Wealth Tech platform and onboard MSME clients. The medium enterprises also pay fees for using the analytics platform. Additionally, the enterprise’s annual maintenance fee is payable to use the platform. Expanding Distribution Network With the acquisition and integration of iServeU, the FinTech company expanded its distribution network in rural India through 2.5 lakh plus retailers. In the Urban Tech segment, new mortgage partners were added. The Wealth Tech segment added new enterprise logos in the analytics business. In addition, new products were added to the credit as well as non-credit segments. The iServeU acquisition added Direct Money Transfer (DMT), Micro-ATM (mATM), Aadhaar enabled Payment Services (AePS), and Bharat Bill Payment System (BBPS) services to the existing bouquet. Niyogin is building a unique distribution network that provides FinTech companies efficient market access and enables local services by bringing neobank to the rural populace. It is also doing business with retail stores located in neighborhoods of the same locality. Expanding product offerings and easily accessible Tech platforms permit the company to rapidly expand its reach onboard partners from local retailers, enterprises with store frontage, Fintechs, and finance experts. The financial inclusion, inorganic growth route, innovative data usage, mitigating credit risk and enhancing distribution network to reduce dependency make it unique. Furthermore, upgrading obsolete technology to withstand fierce competition, putting internal control systems in place, and human capital development is other activities to de-risk the business model. They remain compliant with extant regulations governing FinTech companies. Conclusion Niyogin is an innovative FinTech company providing bouquets of products through its distribution network of finance experts, retail stores, Fintechs, and stores with extensive frontage. Its business model is unique, with the potential to expand its reach. Financial inclusion is a significant part of the services extended to the underserved and unserved populace. In addition, the Wealth Tech platform by Finance professionals extends financial planning services to MSMEs and their owners.
How Fintech can help SMEs grow
The entry of fintech into the SME sector started with the introduction of automation tools to get basic tasks done. For example, financial bookkeeping or transaction record-keeping were some of the things which were digitized, thanks to the new fintech tools. Most SMEs slowly started embracing more fintech innovations primarily because they were cost-effective and helped with data accuracy. Let us look at how fintech has revolutionized scale in the SME industries. 1. Facilitating Bank Lending Traditional banking processes for loan disbursements take time. But ever since the introduction of technologies like internet banking or P2P lending, micro-entrepreneurs can secure bank loans more seamlessly. 2. POS Management The Point of Sale (POS) management system is by far the most innovative and helpful solution, which helps SMEs manage their accounting, sales, and transactions. It allows business owners to collect valuable customer information besides facilitating a smooth sale. 3. Cloud-Based Cash Registers SaaS and cloud-based cash registers are less expensive and bulky than traditional billing systems. It makes the entire sale experience smooth for both the seller and the customer. 4. Mobile POS Solutions The introduction of mPOS or mobile POS machines has made payments hassle-free for customers and businesses. This means that a farmer can also purchase grains and fertilizers through a local distributor using a Smart Card without having to withdraw cash. 5. Enhancing Customer Service Innovating software to enhance customer experience is slowly making its way into the SME sector. Direct payments from the customer to the business’ bank account are a great example. 6. Solutions Promoting Loyalty Innovative technology, machine learning, artificial intelligence, and gamification have made customer loyalty possible. For example, chatbots or customer chat services that allow instant resolution of queries significantly improve customer experience, promoting loyalty. 7. Going Digital Everyone in the 21st century relies on online data for making consumer decisions. Fintech has helped SMEs shift to digital solutions. Be it online shopping or banking; these solutions focus on bridging the divide between the consumer and the business. 8. Omnichannel Banking The omnichannel banking experience allows SMEs to leverage multiple banking channels like print, mobile phone, or desktop applications. They can check and manage banking information at the tip of their fingers. 9. Digital Lending Fintech has revolutionized digital lending. Who would have imagined that you could apply for loans in a few steps sitting in the comfort of your home? It is now possible to do that and much more, thanks to innovative fintech solutions in the lending space. 10. Data Sharing APIs or Application Program Interfaces have a huge role when it comes to fintech companies contributing to SMEs. APIs allow service providers to share relevant data to enhance customer experience. It also promotes open banking ecosystem platforms. Here, we have listed just a few contributions of fintech to the SME sector. Fintech has caused a revolution, thanks to innovative tech solutions, which aim to change the face of financial solutions and steer the growth of SMEs in the long run.
Building A Credit Score
A credit score is a numerical figure ranging anywhere between 300 and 900. The higher the score, the better the chances of a person to avail of credit in the form of a loan. Any score which is 750 or above is considered a good credit score. The credit score is based on the credit history of a person. This includes the number of open accounts, total debt, repayment history along with several other factors. Lenders like banks use credit scores to evaluate the probability of an individual repaying the loan. Thus, the better the score, the better the chances of availing of a loan. Wondering if there is any way to improve your credit score? You can improve your credit score—start by consolidating your debts. Steps to build good credit history and credit score Needless to say that a good credit score helps you get loan approvals and credit cards way faster. But building a good credit history takes time. Money lending organizations like banks hesitate a little to lend money to applicants who have poor or no credit history at all. The reason is that, before giving any approval, the lender checks the credit history. They analyze the creditworthiness of individuals. Here are a few tips that will help you build one! 1. Apply for a Credit Card A credit card is a basic and staple product that helps build a good credit history, One of the hassle-free ways of building creditworthiness. What you may not know is that you can apply for two kinds of credit cards: unsecured and secured. Unsecured Credit Card: On your journey to build a credit score, applying for an unsecured credit card is wise; however, beginners cannot get easy approval on any credit. And to secure a credit card with the best interest rates, the applicants must have a credit score of 750 or above. Secured Credit Card: This option works well for those who are either businessmen or working on a consultant basis. To get quick approval on a credit card, you are required to give some collateral against the credit card, like some sort of fixed deposit. The limit of the credit card will be the amount of your fixed deposit in that scenario. 2. Avoid applying for multiple credit applications Suppose you apply multiple credit applications. Then financial institutions like banks or NBFCs may consider you credit-hungry. This can significantly affect your credit score also. Give at least a six-month gap in the filing of any credit applications. 3. Learn the details of your credit report Understanding how a credit report will help you build a good credit score. At the fundamental level, what a credit report shows is your credit history. It has information about the loans you have availed of and your repayment history. The major credit bureaus are CIBIL, Experian, Equifax, and CRIF. As per the Credit Information Act, you can download one credit report for free in the year on the website of all these credit bureaus. Conclusion Maintaining credit discipline is essential to building a good credit history. When your credit score is not what you would like it to be, take steps to enhance your credit score. Reading the credit reports regularly helps point out any inadvertent discrepancy. The major factors that need to be considered in a credit report are- repayment history, borrowings, length of credit history, credit limit utilization, and total debt determine a credit score. All these steps boost your credit history and credit score.
How to Improve Your Finances
Introduction The adage “money cannot buy happiness” may be accurate, but most aspirations in life require money, whether personal or business. In current times, it is imperative to understand a strategic approach to investing your “cash in hand.” It is the only way to grow your business portfolio. When it comes to financial planning, there are different aspects of financial planning that you need to incorporate into your methods of money management. The following tasks are part of the financial planning activity: Analyze the business ecosystem. Follow business goals and objectives Determine the types of resources required to accomplish these goals. Measure the quantity of the resource Determine the overall expense of each type of resource. Compile the expenses to make a budget. Determine any dangers and problems with the planned budget. Here are a few steps to improve your finance: Proper planning Starting with a strategic plan encourages you to consider the goals you have for your business. Consider what you’ll need to accomplish these objectives before considering the statistics. Will you need to purchase more tools or recruit more workers? Can new objectives potentially impact your cash flow? What more materials will you require? To assist with your future measures, appraise the effect on the financial position of your business and compile a list of current costs and assets. Modeling Based on expected costs and revenue projections, this should be done. Consider your objectives and enter the expenses required to attain them. Include a variety of circumstances. Make a range that includes the most likely, optimistic, and pessimistic outcomes so you can determine the effects of each. Go over the plan with your experts in your respective field. These experts will help you to understand various business sensitivities for better analysis and pitching to investors. Emergency fund Make a plan for when no money is coming in, or your firm has taken an unforeseen turn after looking at your cash flow statement and assets. If you need money now, consider having cash reserves or a sizable line of credit. To help you break even, you might also need to plan how to dispose of some assets. Businesses may need some funds to meet uncertainties; therefore, an emergency fund is imperative for all kinds of businesses. Evaluation Examine actual outcomes in your cash flow statement, income estimates, and even company ratios as needed during the year to determine whether you need to change your strategy or are on the right track. By regularly checking in, you can identify possible issues before they worsen. A business’s financial plan should answer a few questions: How much fund is required to get the business off the ground? How much money should the business make in the year? What is the budget for the year? What amount of profits should be reinvested in the business? Effective money management is the key India recently has become a hub of startups, with various schemes promoted by the government of India to provide a favorable ecosystem. There is a rise in MSMEs in the country; they need to understand the rationale and efficiency of money management. A business-specific financial is imperative for all businesses. Financial literacy is the first step in learning about money and how it works. Today, your business may also get expert help in managing your finances through various channels like Moneyfront, whether digital or professional. So, as a business owner, spend some time understanding the business, business goals, and how to link the two.
How to Get a Business Loan
All organizations, big or small, need funds to start, scale and sustain. Depending on their growth stage, companies can choose different types of loans. They can remit the loans through profits. In the following sections, we have listed in detail the different types of loans you can apply for as a business, the process of securing them, and details about interest rates. Common Types of Business Loans In India, there are 8 broad categories of business loans: Type of Loans Particulars Interest Rate Startup loan These loans are exclusively for startup enterprises. Many banks are establishing dedicated startup branches that solely cater to the needs of startup banking and funding requirements. 15%-20% p.a. Working capital loan Businesses use this loan to meet their working capital needs and run daily operations. This primarily includes Cash Credit loans. 12%-18% p.a. Term loan It can either be secured or unsecured. It has a fixed tenure of repayment ranging from 12 months to 5 years. 10%-15% p.a. Letter of credit It is issued by a bank to a trading company that guarantees payments to companies involved in international trade. 10%-15% p.a. Invoice discounting This helps to bridge the time gap between the raising of invoices and the receipt of payment by the supplier. The lender usually provides money to the borrower after deducting a certain amount known as a discount. 12%-18% p.a. Overdrafts These allow borrowers to withdraw money from their accounts over and above their remaining balance. 10%-15% p.a. Machinery loan As the name suggests, it is used to purchase new machinery or equipment whereby the machine serves as a security to the lender. 8%-15% p.a. Mudra loan Mudra loan is distributed under the Pradhan Mantri Mudra Yojana. It provides funding to new or existing businesses without any collateral or third-party security. 8%-12% p.a. Process of Securing a Business Loan Broadly, there are 5 crucial steps to follow for applying for a business loan. Step 1: Determine the Purpose of the Loan Firstly, you need to determine the purpose for which you need the business loan. It could be for purchasing the machine, meeting working capital requirements, international trade, etc. Step 2: Check the Eligibility of the Borrower You need to determine your eligibility as a borrower as per the loan required. To check the eligibility, you need to go through your income proof, CIBIL score, banking, etc. Each bank has its own eligibility criteria. Step 3: Prepare the Loan File Once you confirm your eligibility for the loan, gather all your necessary documents. It includes KYC, income proofs (ITR and GST Returns), quotations from the supplier (in case of machine loans), bank statements, audit reports, sales orders, invoices, etc. If you go with new-age lenders like Niyogin, you don’t need to prepare a loan file and submit physical documents. You can just upload the documents on the portal and go ahead with the loan process. This is the power of FinTechs – they are revolutionising finance. Step 4: Present the Loan File to the Most Suitable Lender You need to present your loan file to the most suitable lender. The ideal lender will offer the most flexible terms and have easy eligibility criteria and the lowest interest rate. You might have to make some efforts before you find a suitable lender. Step 5: Coordinate any Queries with the Lender The lender may raise certain queries before sanctioning and disbursing the loan for your business. It is important to coordinate with the lender and sort out any possible queries. This is to ensure quick sanction and disbursal of the loan. In a Nutshell Thanks to fintech innovations and ease of doing business, securing a business loan is much easier and smoother today in India. Fintechs are revolutionising the way credit flows in business and have increased access to credit facilities for all sections of society. Niyogin offers business loans at competitive rates regardless of whether you are situated in urban or rural India. We at Niyogin provide a one-stop solution for all your financial needs be it loans, insurance, domestic money transfer, cash access, or micro ATMs. Further, we are partnering with local vendors and small businesses to help provide financial services to their customers. Visit our website now for more information.
How To Establish Your Credit Score And History
It’s a no-brainer that a low CIBIL score has been one of the major reasons for the rejection of loan applications. Most banks require a credit score above 750 to process the loan application. The second arrangement is NBFC. However, the interest rates and charges levied by the NBFCs makes loan virtually unattractive. Therefore, a good way out is to actively take steps to increase our credit score and build our credit history. How? Let’s find out! What Impacts Your Credit Score and How to Improve the Same? Multiple factors interplay when it comes to building our credit score. Following are some of the important components of a credit score and how much they impact our credit report: 1) Repayment History: Repayment history shows our past credit behaviour and how promptly and timely we made our debt repayments including the defaults if any. It accounts for approximately 30% of our credit score. Pro-Tip: Avoid skipping EMIs and ensure timely payment of your EMIs. Set reminders for EMIs if necessary. 2) Credit Utilisation Limit: How much credit have we utilised from the total credit available constitutes a credit utilisation limit. Credit cards are a good example of this. It can simply be derived by dividing the amount payable by the total credit available. It accounts for approximately 25% of our credit score. Pro-Tip: Try to keep your utilisation ratio below 30%-40%. This ensures that we are not highly dependent on debt. 3) Credit Inquiries: The more inquiries we make, the more we damage our credit score. Multiple hard inquiries are a sign of a potential riskier customer who is running short of funds and therefore racking up debt. Each hard inquiry can reduce our credit score by as much as 3-5 points and stay in our credit reports for about 2 years. 20% of the impact on our credit score is estimated to be because of multiple hard inquiries we make. Pro-Tip: Therefore, it is better to avoid unnecessary inquiries of loans and only inquire when we really need them. You can make soft inquiries. It happens when your credit is checked as part of your background check. It normally includes checking credit scores on third-party websites, prequalified credit card offers etc. 4) Length of Our Credit History: A long and positive credit history is a good indicator for getting our loans sanctioned. The lenders go through our credit history right from the first time we availed of a credit facility. Therefore, if we have been timely on our repayments and showcase good credit behaviour, then it can highly beneficial for future loan arrangements. Pro-tip: Do not close old credit card accounts. You can simply retain them even if you do not use them much now. 5) Credit Mix: Credit mix is the ratio between secured and unsecured loans we have taken. The right credit mix is important to maintain a proper credit score. If we rely too much on unsecured loans, then it will imbalance the credit mix and further lower our CIBIL score. Pro-Tip: Don’t go excessively for unsecured loans like credit cards, personal loans etc. Maintain the right composition of secured and unsecured loans. 6) Check Your Credit Score Timely: We should check our credit score regularly. As per Financial Express, 52% of people know what a CIBIL score is and its importance. Still, 68% of the respondents didn’t know their credit score. Checking credit scores regularly ensures that any misinformation and discrepancies are timely reported. Pro-Tip: We should check our credit score at least twice each year. This ensures that we have a thorough track of our credit score and the effect of our credit behaviour. In a Nutshell A good credit score and credit history are not established overnight. It takes a reasonable amount of time, depending on how well we manage your finances. Lenders note our credit handling abilities and then decide whether we are eligible for credit or not. Niyogin is the new age neobank that provides multiple credit facilities to boost your credit score. From unsecured working capital loans to secured loans and transaction-centric short-duration loans, you can easily avail of credit facilities. The more timely repayments and better credit behaviour you ensure, the higher your CIBIL score will be!
How Financial Inclusion Can Boost India’s GDP
Introduction Financial inclusion has been recognized as a critical facilitator for achieving inclusive and sustainable development. Broadly speaking, “financial inclusion” refers to providing every population segment equal access to various financial services. Besides banking services, these include other financial services like insurance, credit, and equity. Furthermore, financial inclusion safeguards the economic wealth of low-income groups, especially in emergencies, by bringing them within the boundaries of conventional banking. It also protects vulnerable groups against exploitative lending. As a fundamental component of social inclusivity, financial inclusion helps unblock chances for disadvantaged groups to develop and grow, thus reducing poverty and income disparity. The Government of India’s Scheme for Financial Inclusion Pradhan Mantri Jan Dhan Yojna Pradhan Mantri Jeevan Jyoti Bima Yojna Pradhan Mantri Suraksha Bima Yojna Atal Pension Yojna Pradhan Mantri MUDRA Yojna Stand Up India Scheme Pradhan Mantri Vaya Vandana Yojna The benefits of Financial Inclusion For Population Underserved from Formal Finance Access to Government-sponsored benefits: With their funds secured in a bank, marginalized communities or low-income groups can now enjoy many benefits offered by the government of India. Such privileges were earlier out-of-bounds to them due to the absence of bank accounts or incorrect banking details. For Example, Direct benefit transfers for LPG subsidies, for the same RBI has instructed all the commercial banks to open a no-frills account for the unbanked. Accessibility to better credit Government schemes like general credit cards, Kissan credit cards, and microfinance units aim to ensure better credit facilities. The priority sector lending certificates scheme was initiated in April 2016 to incentivize banks that achieve the desired target. This helps in many business opportunities for small and micro-scale players. Promotes digital literacy Digital banking has penetrated far and deep, reaching out to India’s remotest corners. Invariably, using net banking will promote digital literacy among the underprivileged population. MSMEs can expand their businesses within the nation or cross-borders owing to digital mediums Safety nets As previously underserved communities progressively enter the purview of a formal financial framework, the chances of them enjoying the benefits of insurance and education with schemes like Ayushman Bharat and RTE act 2009 grow higher. How does This Financial Inclusion Help the GDP? Here are some ways in which financial inclusivity can impact the GDP positively. Large unexplored markets, improved access to financing, and increased user expectations for financial services, like apps based services, have all contributed to the success of fintech in India. This scenario still has to be improved for a sizable population that is under or unbanked. According to the RBI report, India has a financial inclusion score of 56.4%. Government initiatives and finance sectors can raise the same to far higher heights. Financial inclusion will provide sustainable growth to the country, and Fintechs offering credit will have access to a new customer base. Financial inclusion will foster the growth of digital payments, bringing the nation closer to achieving the vision of a self-reliant India. As per RBI predictions, the number of digital payment users will likely grow from 100 million to 300 million by 2025. Financial inclusion and the growth of digital payments will invariably lead to a surge in demand for Smartphones. Currently, only 15% of women and 34% of men in the country have smartphones. Agritechs is expected to grow with financial inclusion. Their growth, in turn, will increase the contribution of the agri-industry to the total GDP. Agritech is expected to be valued at Rs. 1783 billion by 2025. With schemes like MUDRA, small and micro industries are expected to grow and contribute exponentially to the economy. Finacial Inclusion and Niyogin: Niyogin is a technology-driven platform that enables small-scale businesses both in Rural and Urban areas access to formal finance. Niyogin is reaching out to the 800 million and more underserved groups in India by developing ideas, solutions, and approaches to penetrate deep into rural India. Niyogin’s credit solution provides both secured and unsecured credit facilities to customers. With the right approach and understanding of the financially excluded section, the platform has a curated solution that works well. Besides access to credit, the app encourages customers to switch to digital mediums by showcasing the ease of the same. With Government’s positive push and technological edge, Niyogin will strive to constantly enhance its services and develop financial literacy. With a strategic approach of credit to the unbanked, Niyogin will play its part in financial inclusion.