In India, Informal BNPL gets back its groove - Higher credit, shorter repayment periods and digital payments stand out as key trends
- Medium and small businesses have seen the highest growth in credit lines at 13% and 11%
- Southern states in India have a higher concentration of small and medium businesses than other parts of the country
- Lifestyle categories such as apparel and jewellery show high NPAs, owing to their stagnant demand during Covid and higher ticket sizes
MUMBAI, India, March 9, 2022 /PRNewswire/ -- OkCredit, India's pioneering digital book keeping app released its annual study titled 'Decoding Informal BNPL' - a detailed report that delves deep into the system of credit linked purchase in unorganised retail. This informal BNPL plays a major role in running India's retail engine, 85% of which is unorganised, taking place through neighbourhood brick and mortar stores.
OkCredit's data report is based on the insights generated from 1 billion transactions on its platform recorded last year. The company witnessed a 25% growth in volume of transactions, compared to year before. In value terms, $50 billion worth of credit was added on the digital bookkeeping app, capturing 1.6% of India's GDP.
Quite similar to the exponential growth witnessed in modern BNPL, the informal BNPL too is seeing robust growth along with strong metrics, according to the report.
For example - a good indicator of a healthy BNPL is repayments. The repayment tenure, also known as credit cycle has come down for all categories, pointing to faster repayments in informal BNPL. Apparel and medical in India stores which saw their credit cycle jump up to more than 60 and 40 days respectively during peak of the pandemic in 2020, have seen a steep decline.
The most important aspect of a credit business is credit recovery. OkCredit's data shows that while cash payments are the primary mode of payment, digital payments are on the rise and growing steadily. In India nearly 90% of the online payments users on the platform use UPI. Within that, 60% of the payments for purchases under Rs 200 are being made through UPI. GPay leads in UPI payments, followed by PhonePe, Paytm and Bhim.
Only 3 in 100 Indians have a credit card and with a thin penetration of modern BNPL, informal BNPL has a huge room to thrive, given the size of unorganised retail.
"Over the years of facilitating informal BNPL in India, OkCredit has brought about a huge transformation. This positive change is also reflected in our data, wherein we have seen the credit cycle going down and credit sizes going up. Thanks to digitised credit records, merchants have a better visibility of their customers, can remind them and get back payments faster eventually leading to improved cash flows. This is just the first step. Digitisation is set to unlock many more growth opportunities for retail SMBs," added Harsh Pokharna, CEO and Co-founder of OkCredit.
Report Link: https://okcredit.in/assets/OkCredit_Annual_Report_2021.pdf
SOURCE OkCredit
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