There has been a whole lot of innovations in the digital lending space. This is mostly due to digital players in the tech space in India. Virtually everything has been changed. The big data, social media weight, machine learning, etc. have completely made different KYC (Know your Customer) and credit-checks. Digital loans really stand apart with the use of APIs (Application Program Interfaces) and virtual elements for fast and easy disbursement. The big question still remains whether cryptocurrencies are an effective parallel form for these loans, considering the regulations and the practical concerns behind it.
On this issue, News.Bitcoin.com surveyed players in the industry, and their responses were categorized as skeptical.
If at all there was any hope, it was ruled out by Abhi Upadhyay, a professional in the mobile lending space. “Traditional financial institutions like banks are never going to come close to accept cryptocurrency as security.”
The ‘traditional’ aspect of the financial institutions has actually given room to challengers in this battle. If traditional institutions were able to deep-root their processes and red tape in the lending industry in India just by experimenting a lot, not neglecting the impact of social media rather than old-school documentation for KYC and credibility checks, then why not bitcoin?
The founder and CEO of Rubique, a prominent FinTech player in the digital space, in the person of Manav Jeet, said that the use of cryptocurrency as a collateral in the case of secured loans is a long shot. The difference resides in the amount of regulation India posits compared to other regions. He insisted that: “We are the best regulated markets, and even in terms of awareness only a tiny portion of Indian population is using cryptocurrency. It will take a lot of time for us to get to the stage where we can imagine this form being used in secured loans.”
Saurabh Shankar, the head of marketing at Paysense, another digital lending disruptor in India, believes that cryptocurrency can be used for secured loans. But he explains how it will work: “It is an additional security measure for us when we lend to a customer. Any other form of collateral can be used as security for sure, so why not bitcoin? But the current regulatory environment is not exactly an incentive to consider such options. This may also need additional work. Crypto-to-crypto lending may not be too tricky but crypto-to-fiat would be a whole new space to reckon.”