Financial Inclusion: Lending to first-time borrowers

Although 55% of the banks opened globally were from India, 190 million Indians continue to be unbanked even today. Access to credit was identified as a key indicator of financial inclusion, but first-time borrowers are often deprived of this right. Financial lenders see first-time borrowers as an unnecessary risk and fail to address their needs.rnA large segment of our society remains unbanked due to lack of financial literacy, gender inequality, poverty, and inadequate formal documentation. The need of the hour is a new dynamic where such borrowers aren’t discriminated against or at a disadvantage. rnHere’s where NBFCs come into the picture and create opportunities for first time borrowers: • Data beyond a credit score- The verifications conducted by NBFCs before the approval of a loan go further than formal sources of information like a credit score. They consider social media verification or conduct community validation processes to verify a new borrower’s credibility. This helps them realize opportunities of good credit and puts them in a unique position to help their customer increase their credit score. • Deliver flexibility- Contrary to popular belief, when it comes to financial inclusion, one size doesn’t fit all. Years of studying the financial habits of poor households, their needs and behaviour has given us a little insight into how they manage their limited funds. This has enabled the delivery of financial services and solutions, designed specifically to meet their needs. NBFCs offer flexibility with regards to the principle amount, tenure, and rate of interest charged. • Customized solutions- NBFC like Capri Global select specific areas of focus such as MSME loans, housing finance, personal finance, etc. They leverage their understanding in combination with the technology at their disposal to deliver optimal solutions for their customers who are part of the financially weaker society. • Rural reach- Majority of the unbanked population of India resides within these boundaries, blissfully unaware of or unable to access formal financial services. The key difference that NBFCs bring to the table is their understanding of and ability to reach Tier 2 and Tier 3 cities. With digital picking up pace and a focus on collective progress, these NBFCs have stepped in to help fill this existing credit gap. • Assistance throughout the journey- Some NBFCs go beyond granting the unbanked access to financial services to giving them the support. Ones like Capri Global also provide legal and financial advice that helps them navigate their financial decisions.rnPost an examination of the prevailing trends, we can clearly see that loans are no longer seen as a societal stigma but a medium through which individuals can fulfil their aspirations. The general public is more open to the idea and are willing to give formal finance a chance, only if the get access. rnCapri Global is an NBFC that believes in giving people the opportunity to trigger change for themselves and improve the standard of living for their families. The financial institution delivers MSME loans and housing finance to the underserviced segments of the society with a special focus on Tier 2 and Tier 3 cities and a vision to eliminate gender disparity. While such NBFCs have helped India come a long way, we still a long way to go before we call ourselves a financially inclusive nation.