In this digital age, there are fintech firms which offer small ticket personal loans (STPLs) to smart consumers. Mostly these loans are under 1 lac rupees, and are a sub-set of the personal loan market. There are also instant loans against credit card limits. Majority of borrowers are millenials. Such quick gratification loans are around for years, but have become very popular now. Established banks offer such loans, but are cautious, as these are unsecured. Mostly this is the turf of non-banking financial companies (NBFCs). Fintechs are new players in this field. They have better ability to profile the customers and crunch the credit rating data. They also offer BNPL loans — buy now, pay later loans. These are facilitated by the use of AI and ML softwares. They are used for medical emergencies, as advances on salaries, and towards paying rentals.

Delinquency on small ticket loans is between 7-12 per cent and with better profiling reduces 8-9 per cent. Later it could stabilize at 7-5 per cent.

There are peer-to-peer lending platforms — P2P. They, however, have a minuscule share. Many digital apps for loans started around 2015-16. There is e-KYC. However, there are many fake apps. They misguide consumers on interest rates, charge high processing fees, misuse KYC data, change their names or disappear. These commit frauds. However, even legal apps can be used for fraudulent practices.