The Pattern #3: Instant grocery gets faster with BNPL, Mudra wobbles, and farmers struggle

Mayank Jain   /    Head - Marketing and Content    /    2022-03-25

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    What a week it’s been - there’s truly never a dull moment in the Indian economy.

    For starters, the homegrown E-Commerce giant Flipkart Wholesale announced its collaboration with Lending as a service startup CreditVidya, in order to provide buy now, pay later services to its 1.5 million merchants.

    With this partnership, Flipkart will now have access to USD 100 Mn in capital through multiple financial institutions.

    We’re particularly excited about this, considering we’re big believers that FinTech-E-Commerce partnerships to embed finance at the point of sale could be the answer to the MSME credit gap in India.

    In this piece, my colleague Aparna explores how digital platforms can (and should) leverage third-party resources to create more value for their customers.

    At FinBox, we work with the largest B2B platforms across Retail tech, HR tech and e-commerce to enable BNPL and business financing for millions of users. Through seeing lakhs of daily transactions go through our platform, we've reached a key insight that it's not enough to solve access to credit - underwriting and collections intelligence is the secret sauce to BNPL success. We wrote this explainer that discusses some of the common flaws in risk assessment and how lenders and platforms can prevent making costly errors.

    There’s also this great article by our content specialist Chitwan, who talks about how embedding finance in your platform opens up new revenue streams while improving customer experience and bringing down acquisition costs.

    Coming back to the MSME credit gap, the Pradhan Mantri Mudra Yojana (PMMY) seems to have seen better days. Disbursals have dropped sharply - by 16% in FY 2022 compared to FY 2021, and this is being attributed to the slow pace of recovery in the microfinance sector. To make matters worse, non-performing assets under the scheme have surged by a stunning 68% in the same period. 

    Reams of research has consistently shown that certain government schemes aimed towards the traditionally underbanked should be taken with a pinch of salt, and the PMMY is no different. Things aren’t always as they seem, and when the numbers are dug into, they tell a whole new story. That’s precisely what our content specialist Anna has done in this in-depth data piece examining the relationship between Mudra performance and SME lending.

    Moving from one priority sector to another, there’s distressing news coming in from Maharashtra, where farmers are becoming increasingly dependent on private money lenders. Reports say that the number of individuals seeking loans from licensed private money lenders in the state increased by 27 percent in 2021, while the loan amount saw a 42 percent increase during the same period.

    Truth is, access to finance in agriculture is no longer as big of an issue it was till a few years ago. The challenge today for India’s farmers is access to quality finance, that doesn't put them in a vicious cycle of debt. Chitwan explores this conundrum in her article that talks of how FinTechs can help better manage and assess the risks in agricultural lending.

    Source: India Today

    And that’s a wrap for this week. Do write in and tell us what you thought about this edition of The Pattern. And while you wait for the next, here are some reading recommendations to catch you up on what else is happening in FinTech, startups, and everything in between:

    Before we leave you to it, here’s a quick reminder to follow FinBox on LinkedIn and stay up to date with what we’re up to!

    Cheers, Mayank

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