It is important to explore and acknowledge what the lenders do, and how they can do it better. Recently, India was declared the 3rd largest economy in Asia and had the third-highest number of IPOs globally. As the country has been moving towards greater financial inclusion, improved technological prowess, and a robust, self-sufficient economic ecosystem, new IPOs, and startups have acted as core catalysts to achieve these goals.
It is a fact that most startups, if not all, raise funds for multiple rounds – many starting from pre-seed and going up to Series E, and hopefully afterward, to IPO. And while borrowing or subscribing to equity is what people normally aspire for. Why shouldn’t they too ride the digital wave that is taking India by storm?
According to the lending industry update issued by India Brand Equity Foundation (IBEF), bank assets across different sectors in India rose between the financial year 2018-21. Total existing assets across public and private sector banks in FY’21 were valued at USD 2.48 trillion.
Between 2016 and 2021, bank credit (loans given out) increased by a CAGR of 0.29%, and the total amount of loans given out amounted to almost USD 1500 billion. This CAGR is the 8th highest in the world.
These figures are massive and are based on the cash flow reports of scheduled banks. However, many significant players of the lending industry (such as NBFCs), are not included herein. This means that credit extension has been significantly higher.
Given Budget 2022’s focus on greater funding and more inclusiveness for startups, there are a lot of opportunities for the lending industry to exploit. With increasing digitization comes a demand for building newer and better digital solutions for lending. And this is crucial since ‘digital’ equals ‘accessible’ in most use-cases.
Lending with escrow is a fairly simple process if you’re going digital-
The lending company and the borrowing company get eKYC’d by Castler and form a quick escrow eAgreement. This agreement lays down the common terms and conditions of both the respective companies
The digital escrow account is created instantly at Castler, without you getting involved in tedious documentation and long waiting hours
Once the account is created the lending company can deposit the agreed amount into the escrow account
Once the terms of the agreements are fulfilled from both sides, the amount from the escrow account goes to the borrowing company
Diving into the depths and reality of present generations, we find that online payment frauds have found commonplace. When it comes to lending or even borrowing security is what everyone wishes for? Thus, to make this a reality, it’s time for everyone to know the importance of an escrow service.
An escrow account is used to make payments securely without getting duped. At Castler we provide you the feature of eKYC’d to ensure that you only transact with verified parties. It acts as a bridge between the respective parties who are involved in transactions and removes the hiccups of false transactions.
The borrower can avail of the following benefits by opening an escrow account:
The borrower can simply rely on the escrow service provider to get their amount received without worrying about being duped
The borrower need not get involved in any tedious documentation while opening a digital escrow account
Opening a digital escrow account will cost you minimal charges as compared to a traditional escrow account
The borrower need not stress on whether the lending party has a valid account or not. As Castler is here to ensure that you are involved in 100% secure transactions with verified parties only.
The lender on the other hand can also have access to the following benefits:
The lender can simply rely on the escrow service provider to make sure that the account to whom they are lending the money doesn’t belong to an imposter.
The lender need not get involved in any tedious documentation while opening a digital escrow account
Opening a digital escrow account will cost you minimal charges as compared to a traditional escrow account
The lender can rely on Castler and get involved with India’s trust-based platform. This will help them build a trust-based transaction community
Comment your thoughts down below and share with us what you think! You can also mention any particular fintech topics you would like us to cover in our upcoming blogs.
Read More:The IPO Process in India