India achieves a new milestone in financial inclusion and credit growth

Expanding credit access remains a key lever of growth in India, as emerging technologies allow lenders to assess and meet the financial needs of consumers in newer and more efficient ways. The transformative impact of these developments and the changing face of mainstream credit were encapsulated by the landmark CNBC-TV18 & Lentra present Digital Lending Summit, held on December 13 in Mumbai. It gave audiences an in-depth look at the people, processes, and principles that are shaping digital lending in India, growing at an annualised rate of 9% over the past five years and exemplified by the rise of Lentra and its suite of 3,600 fully-integrated digital lending SaaS solutions, which serve 45 financial institutions and process 2 million loan applications every month.

On the cusp of becoming the world's third-largest economy, India showcases an inspiring growth trajectory. The backbone of this advancement rests on the robust expansion of the micro, small, and medium enterprises (MSME) sector, currently comprising around 63.4 million units. However, amidst this promising narrative lies a crucial hurdle - the restricted access to formal credit. Domestic credit to India's private sector remains at 55% of its GDP, significantly trailing behind the global average of 148%. This shortfall places India behind its economically thriving Asian counterparts like China, South Korea, and Vietnam. Bridging this credit gap becomes pivotal for sustaining and amplifying India's growth story.

Bearing the theme ‘Enabling Economic Growth For All: Bridging The Credit Gap’, the Digital Lending Summit saw banking and financial sector leaders clearly establish what’s at stake. “Leveraging GenAI and predictive AI would unlock unparalleled efficiency”, said Sreyssha George, Managing Director & Partner, BCG, during a presentation which preceded her fireside chat with D Venkatesh, CEO Lentra. Ratan Kesh, Executive Director & COO of Bandhan Bank, believed that “it’s not about financial inclusion anymore, it’s more about financial empowerment” when speaking about the core objectives of expanding credit.

Inclusion was a pertinent theme in the keynote by Mr Jayant Kumar Dash, Executive Director, RBI, who pinpointed ‘access, usage and quality’ as the foundation of credit inclusion. These ideals are reflected in India’s world-class free-to-use public digital infrastructure, which has given fintech innovation a boost and was cited by both D Venkatesh and Dinesh Khara, Chairman, SBI, as a chief facilitator of financial inclusion during their fireside chat and special address, respectively. As the leaders looked ahead, the possibilities truly seemed limitless. “We talk about Instagram being one of the most popular apps. Why can’t digital lending be as popular as that?” asked Arvind Vohra, Group Head – Retail Assets, HDFC Bank. The good news is digital lending seems to be on the right course to scale up, as Karthik Srinivasan, Chief Business Officer, HDB Financial Services, noted. “There is a convergence between what we want and what customers want”.

In the panel themed, "Beyond Banking: NBFCs & Tech-Enabled Credit Inclusion, Ramesh Iyer, Managing Director, Mahindra Finance, spoke about going digital. He said - "it's not only about lending, it's also the ability to get back the money. There will always be caution on how to lend & still recover, and which is why you will find this goes a little slow. Now, with the coming of digital means and supported by an ability to underwrite data, that number is increasing, and that's where we see financial inclusion at a much faster pace."

In a conversation with Ankur Handa and Rangarajan Vasudevan from Lentra, introduced the audience to India's first and one of its kind, "Lentra Intelligent Lending Cloud," which is a supercharged upgrade of the Lentra platform, blending innovation and intelligence with generative AI to make lending a more personalised experience for everyone.

One of its shining features is the Lentra Convo – a multilingual digital assistant that works its magic using natural language, guiding users through the lending journey seamlessly. This is anticipated to serve as a wonder tool for individuals looking for digital lending options for their start-ups, furthering the economic growth in India. Since MSMEs contribute 30% to India's GDP, they play a crucial role in employment.

These enterprises thrive in an environment fostering entrepreneurship and finance accessibility. Embracing digitisation and data-driven lending is now crucial. This approach minimises risks, gauges loan repayment probabilities, and enables optimised customer strategies, driving growth in the credit card sector. Anupam Mishra, Director, AWS, spoke about the potential of generative AI & machine learning in the coming years and how it can transform industries. He further explained how more & more individuals are leveraging digital tools for managing personal finance.

Lentra has emerged as a trailblazer in digital lending. It stands proudly as an end-to-end cloud lending platform democratising Digital lending through its secure and scalable SaaS platform serving over 45 financial institutions. Rajnish Khare, Chief Digital Officer, Union Bank of India, expressed in a conversation while explaining the efficiency of Lentra as a platform, easy customisation and reasonable costs, "Lentra to us has been a very reliable partner with an excellent technology stack. The relationship management has been great from Lentra's side. I have not seen many companies proactively approaching customers & understanding their business."

In another conversation with Lentra Santanu Basu, Head SME, Aditya Birla Finance highlighted the evolution of the whole space of digital lending or digitised processes. Pankaj Poddar, Chief Risk Officer, SBFC India added, "If you have to give loans in more than 100 or 200 towns across 16 states, it is not possible to do that manually, so you need a workflow, ENT engine for you to back it."

Sumant Rampal, Country Head (BBG, RBG, SLI), HDFC Bank, gave a detailed overview of the scope of MSME & agri-lending in India, as he conveyed - "I think fundamentally in the last decade or so, the biggest change which happened is that whether it’s a micro-unit or a medium-sized entity or a farmer, there is a lot of data which is flowing into banks there is a lot of information which is flowing to institutions and I think that has become the most powerful tool available in making sure that the end consumer gets the benefit of it."

If the morning session gave audiences a chance to hear from leaders on overarching themes of inclusion and technology, the post-lunch session allowed them to pick and choose from a series of simultaneous breakout sessions, covering topics ranging from ‘Navigating the Evolving Landscape of MSME’ to ‘Data-driven Decision Making in Lending’ and ‘Strategies for Credit Card Growth: Enhancing Acquisitions, Conversions, and Usage’. But the highlight of the evening session was the Recognition Ceremony to felicitate pioneers of digital lending who have distinguished themselves through innovative products and services.

Before that, audiences were treated to illuminate insights from two globally reputed personalities. Cyrus Daruwala, MD – Global Financial Services, IDC, delivered an uplifting verdict on the ‘India Growth Story 2024’. Then, renowned South African cricketer Jonty Rhodes spoke to Anand Narsimhan, Managing Editor – Special Projects, CNN-News18, about preparing for success. Jonty Rhodes also handed out mementoes of recognition to the felicitated lenders, which included TVS Credit Services for Excellence in Digital Distribution, HDFC Bank for Excellence in Digital Lending, IndusInd Bank for Excellence in Digital Lending Growth, Tata Motors Finance for Excellence in Auto Finance, and Avanse Financial for Excellence in Education Financing.

The Digital Lending Summit showcased how ingenuity and ideas are seeking to keep pace with the India growth story, bolstered by innovations like the Lentra Intelligent Lending Cloud, a bundle of novel AI use cases that was launched at the event and promises to make lending smarter and more intuitive. It brought together banks, NBFCs, and technology leaders to become partners in the future growth of the digital lending ecosystem, sharing insights and seeking the same solutions. The true impact of the Digital Lending Summit was perfectly summed up by Ashwini Kumar Tewari, Managing Director, SBI, when he said, “Lending has just taken off, and this entire summit on digital is also a kind of inclusion."

Note: This is a partnered post.