Credit Score does not matter

We know if a person’s credit score remains in the range of 750 to 900, he is the preferred customer for applying the personal loan from banks or Non Banking Finance Company and in that case the person can fix low rate of interest. Also we know, credit score is the vital parameter to decide the banks or NBFCs that will the provide personal loan or not to the applicant.

Wait! The story does not end.

There is glitch, if the applicant is pensioner then no way to avail personal loan from private lenders, because they are not interested to provide personal loan to the pensioner, they only deal with Salaried or self employed. Only some PSU banks provide personal loan to the pensioners subject to condition that the pension should be credited to their any branch.

So here credit score is irrelevant.

Peer to peer lending or P2P, started their startup in India in some cities. The interesting side of these P2P startup is they are not direct lender, they are an online platform where borrowers and lenders will make listing their name, borrowers have to fill up online form along with uploading few scanned or photo documents. Lenders will choose the borrowers from that listing and will determine how much loan can disburse and rate of interest. P2P will charge 2-4% on the loan amount.

Shit! Are they startup yet? Listing means simple broker.

Day by day India’s retail loan market is expanding and the opportunity is grabbing micro finance companies to provide self help group loan to the women across the country, their loan is usually for short term, 12 to 20 months, maximum 24 months, and repayment weekly or monthly, rate of interest not less than 26% per annum.

Loan is all time need base product, where customers are abundant but lenders are limited, so, it is the seller’s market.

Lenders are Lord

Sometimes Borrowers, mostly corporate borrowers are next to God, because bank managers contact them and request them to take business loan at marginal cost. Non Performing Asset or NPA, they gift to the banks in reverse way to the nation and its economy, on the other hand individual borrower face suffer and they are treated as beggar like in India.

This is the fate of Indian retail loan market.

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