Tag: Credit

This blog highlights the journey of Xtracap, a fintech start-up that provides extended credit to low- and middle-income merchants in India towards their daily working capital needs through its flagship technology platform—Bridge2Capital.

The ability of Financial Institutions (FI) to effectively underwrite microenterprise loans depends on accurate assessment of the loan applicant’s ability and intent to repay. Traditionally, financial institutions use their past knowledge and experience of financing microenterprises to carry out such assessments.

The use of credit is an essential part of how low-income households manage to smooth their consumption in the face of “double-whammy” combinations of income and expenditure shocks. The big push for microcredit in the past decade has led to an abundance of microfinance providers and other providers that offer standardized products.

The potential to harness digital footprints and channels to provide rapid access to credit cannot, and should not, be denied. But it will take concerted efforts to optimise the products currently being delivered and realise the full potential of the digital revolution for consumers and providers alike.

Each month,  SAJIDA foundation, an NGO in Bangladesh receives loan repayments from almost 10,000 clients across five of their branches using mobile money.  These repayments record roughly 25,000 transactions totaling BDT  50  million  (around  USD 600,000). 

So is it just because people do not have access to formal services that these social networks are important or are there dimensions of this borrowing that have an intrinsic value?