NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Thursday, February 2, 2017

When Deepthi K, a software engineer, came to know of a wedding in her in-law’s family 15 days ahead of her salary day, she was in a fix. Neither did she have the money needed for the wedding nor the time to apply for a bank loanand go through a long paperwork process. Pressed for time, she approached a city-based start-up instead and got the entire amount of Rs 3 lakh within two days.

Many young professionals like Deepthi are turning to start-ups in the ‘alternative lending’ sector to tide over their monthly cash crunch. From ‘payday loan’, which is an early salary that professionals can apply for using their payslips, to personal loans and purchase loans, these start-ups are known to offer ‘micro loans’ starting from Rs 5,000. Unlike traditional banking and finance institutions, these start-ups also take care of all the paperwork and disburse the cash in less than three days.

“Since my job keeps me busy through weekdays, I do not have the time to visit the bank and do all the paperwork. That’s why I decided to apply online. When I applied for a personal loan of Rs 3 lakh on Apna Loan Bazaar, members of the start-up visited my office to collect all the details required in the documentation process. The cash was disbursed in just two days,” Deepthi said.