The rising tide of cash flow-based loans

In the dusty bylanes of Bengaluru, a quiet transformation is happening that has been missed by banks on the main street. In a rapidly urbanizing city, villages have found themselves encircled by urban sprawl. Houses are tightly packed next to each other. The roads are so narrow that two cars approaching from opposite sides of the road come to a screeching halt and gently inch past each other after much signalling back and forth. A bus entering these lanes looms large as a monster and chokes traffic for 15 minutes.

In these dusty lanes, we met three different entrepreneurs from three different sectors who had one thing in common: they had never taken a loan in their lives, either from a money lender or from a bank, until recently. The tipping point came when Paytm and Payworld approached these individuals and offered them collateral-free instant loans from Capital Float, a non-banking financial company (NBFC) set up to provide unsecured business loans to small and medium enterprises (SMEs). The three entrepreneurs decided to try out this instant loan offer. Using an app, they submitted their Aadhaar eKYC (electronic know your customer) and permanent account numbers (PANs) and received a loan offer on the app itself. Using Aadhaar eSign, they accepted the loan agreement. After acceptance, the loan amount was credited to their account within a day....Read more


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