Era where everyone is advancing and entering into the digital world, transforming traditional relations into digital ones as one can trace it in our friend circle and other relations either market relation, education which becomes more virtual rather than traditional as we have earlier.
Digital lending overveiw
In the same manner Digital lending which of course a lending method online rather than traditional one as typical one like banks. With technical advancement it is nowadays booming with golden colors which have reach not only rich segment but to the vulnerable sections as well. Loan apps, which was just 4.9% of all apps installed in India in October 2020, which grown 11% in October 2021, according to analytics firm Apps Flyer. And this is booming not only in India, but is booming globally.
Potential it have
Digital lending not only provides loans, but it includes financial products and services which is far more efficient, fair, transparent and inclusive. Compare to traditional financial dealings it does not require long banking dealings or onsite visits, no collaterals etc. This only need a bank account thus it is entering into rural and vulnerable segments empowering rural population, women which in turn women empowerment.
It helped in reducing borrowing from informal sectors like family, friends, moneylenders which is at many times unreasonable high interest rates and thus it is harassing much more. A number of people need timely finance in those cases digital lending is very much useful and convenient. And it is believed that it have been also known for cutting overhead costs by 30-50 percentage. Not only it provide finance to individual but also for small bussinesses, enterprises, MSMEs etc.
Cons
However, this does not exit without criticism. Various cases across globe shows that a number of fraud apps dealing with digital lending, which is a big question to security and safety of the entire system. Apart from that they attract borrowers for quick and hassle-free loans .they are also indulging in getting data which can be misused at any point. Also, their recovery rate are exorbitant along with hidden charges and recovery method are not devoid of dicey terms and conditions. Using these conditions they are harassing a big chunk of people.
Conclusion
World is on the cusp of a digital lending revolution, and ensuring that this financing is done responsibly will ensure that the revolution's benefits are fulfilled.Because numerous stakeholders have access to sensitive customer data, clear criteria must be established about the types of data that can be stored, the amount of time data can be held, and data use limits.Digital lenders should create and agree to a code of conduct that emphasises the concepts of integrity, openness, and consumer protection, as well as clear disclosure and grievance redressal criteria.It is possible to establish a company that tracks all digital loans and consumer/lender credit histories. Aside from putting in place technological measures, customers should be educated and trained to raise awareness.So, there needs to be some regulatory methods otherwise it hinders the rich potential of digital lending which ultimately hinders global growth and prosperity.
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