INR35,000 crore question: Can digital-lending startups survive the liquidity squeeze?
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Online lenders are playing a role in converting India from a cash economy to a digital economy. But the liquidity crunch brought on by the troubles of NBFCs is proving to be a big hurdle for them.
Synopsis
After the IL&FS implosion, small-ticket online lenders, already negotiating tough VC terms for equity finance, are facing a squeeze on debt financing, too. They have to wait out the crisis, hoping positives like low defaults by borrowers come to good stead when funding revives.
Till about a year ago, LoanTap, a Pune-based ‘digital non-bank’ specialising in personal loans, could run an INR250 crore loan book with credit lines from just five wholesale lenders. But things changed when IL&FS defaulted on its repayments in August 2018. The liquidity squeeze that ensued did not even spare tech-driven non-banks that peddled micro loans online. “We now partner with 13-15 lenders. New sanctions per lender have dropped 25%
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