Payday loans in India

Payday loans – The Potential Sector for startups overcome the cash crunch situation faced by many in India

Well running startups is never been easy for all; the common blow which many startup owners suffer would be the cash crunch problem. In fact, these days many salaried people facing such cash crunch problem right from the middle of the month, where they supposed to spend the second half of the month without having any extra cash in hand. If any unexpected event happens then it would be a disaster month in terms of budget for all middle class people all over the world, particularly in the developing country like India it’s really hard to explain the situation.

How to tackle the Cash Crunch situation?

In today’s market, one can find lots of finance providers who ready to offers cash with interest rate slightly higher than the bank rates. However, it would the best option in order to get some quick cash for handling the cash crunch situation. If you are the owner of the startups or the monthly salaried person then looking for the quick pay day loans would be the rightful option to sort out the finance shortage in short time frame.

Pay-day Loans

Pay-day loans are also be referred as the “payday advance”, it can be defined as the small amount of loan which can be availed from the loan lenders for the high rate of interest when compared with the rated fixed on the nationalized finance institutes. Also, the notable facts about this payday loans is there would a mutual agreement signed by the both parties lender and the receiver as the loan amount would be repaid in next wages or any other short time which is not possible in any other form of loans.

Startups in Pay-day Loan Sector in India

Though, it is widely believed that these kinds of the short term advance loans are in practiced in the western countries. Now, those kinds of procedures are started to influence in the Indian society too, these days many employees and even the business owners are seeking for such quick cash lender where they can repay them on their next pay day.

Here the some facts about the payday loans in India

S.No Facts about the payday loans Sector in India Detailed Information
1 Payday loan market in India Around $10.27 Billion (Rs.70 Thousand Crore)
2 Estimated Level of Payday loan market by end of 2017 About $14 Billion
3 Average eligibility loan amount for fresher’s Between Rs. 5000 to Rs. 50,000
4 Number of Startups in payday sector in India 84 in total
5 Number of payday loan startups started in 2016 Around 30

Current Situation in India

As the nation, faced some heavy blow in terms of finance by banning higher value currency from the market, it literally boosted the payday loan lender’s business in the market. People tend to approach lenders as they not able to retrieve cash from the respective account due to lack in currency notes for the past two months.

Mr. Akshay Mehrotra, The CEO of the newly started pay-day loan sector which is a Pune based finance company quoted that “The finance company in the payday loan sector faced some dramatic boost for the past couple of months due to the demonetization process implemented in the nation”. Having more than 8000 repeated customers the firm manages to steady its business in its early stage.

Market Growth in Pay-day Loan sector

The CEO of the ‘earlysalary’ also added that, many companies and firms from different sectors are willing to invest in the payday loan sector as the non-banking sectors witnessing high growth in recent period. He also pointed that the about 1.5 Million has been invested on his own firm by the Transcorp International Ltd.

Support of Technology offered by the Payday loan startups

With the aid of digitalization, the startups which are in the payday loan sectors are started to offer digital form of loan lending provision to its customers. By doing to it will ease the loans getting process for the common people across the nation, in addition it will reduces the paper works for the lenders.

Some of popular payday loan startups in India
  • Finomena
  • Buddy India
  • EarlySalary
  • ReBase
  • InstaPaisa
  • CashCare
  • CASHe

Benefits of using advanced technology in payday loan startups

  • With the aid of modern digital technology the payday loan lenders can be provide cash to the applicant in much faster mode when compared with the normal financial institutes of India.
  • As per the recent survey it is calculated that the payday loans lenders manages to approve the loan application of the applicant within 10 minutes in average. However, if it is manual mode of operation it might take about a day to process the loan application.
  • In terms of risk factor, the payday loan lenders has the upper hand one sorting potential risk factors well advance before process the loans.
  • The risk factors would be easily identified in the payday loan sectors by analyzing the data metrics gather on the applicants activities and history of financial score in online.


Though, it seems to be highly benefits for the borrowers the payday loan process would eventually empty the borrowers pocket with their high interest rates if the borrowers are unaware about his own loan status. Hope, RBI would take necessary protocol to regulate the activities of payday loan lenders in India soon.

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