In the next five years, the NBFC sector will expand further and will roll out quantum of employment opportunities across various divisions. New players, new geographies, new business models and huge cross-selling opportunities will be seen. There is a lot of flexibility in the Indian market.
The online market is also growing fast in India.
The Government of India has allowed 100 per cent Foreign Direct Investment (FDI) in online retail of goods and services through the automatic route, thereby providing clarity on the existing businesses of e-commerce companies operating in India.
According to India Brand Equity Foundation, India is expected to become the world’s fastest growing e-commerce market, driven by robust investment in the sector and rapid increase in the number of internet users. Various agencies have high expectations about growth of Indian e-commerce markets. Indian e-commerce sales are expected to reach USD 120 billion by 2020 from USD 30 billion in 2016.
Further, India’s e-commerce market is expected to reach USD 220 billion in terms of gross merchandise value (GMV) and 530 million shoppers by 2025, led by faster speeds on reliable telecom networks, faster adoption of online services and better variety as well as convenience.
A lot of consumers are buying online now. If one is buying a white good, one can actually take an EMI there on the website when the purchase is being made.
This offers a big opportunity for NBFCs like Home Credit. Various estimates suggest that the EMI based platform for online retail is still only 15 of the overall market. That is why we are planning for online loan disbursement in the coming months. We might roll out online loan distribution system in India from next year. As mentioned earlier, India is a key growth market for the Home Credit Group and we predict that 2017 onwards will be a really big and promising time for us.
Over decades of time and across economies that are both evolved and developing, we have developed the “secret sauce” of assessing a customer’s affordability for the loan and ability to repay it in a timely manner. Today, to apply for a Home Credit loan, all you need is a valid address and identity proof document and in certain cases, valid income proof. These two documents give us a fair idea in a few minutes if a customer is eligible for a loan.
As per recent data from the government’s National Sample Survey Organisation (NSSO), the banking system (including NBFCs and co-operative banks) accounts for less than 65 per cent of total consumer debt outstanding in India. The share of the unorganised market (primarily money lenders) has been falling steadily, a process which we expect to continue.
Consumer debt levels in India are significantly below those seen in other emerging and developed economies, suggesting this will remain an important growth driver for the Indian alternate lending system in the coming years.
(Opinion piece exclusively written for SMEpost by Marek Machala, Head of Online, Home Credit India)