Mumbai, Feb 22 (IANS) Aiming to introduce Indian consumers to the concept of responsible lending practices, the Financial Planning Standards Board India (FPSB) and IIM Lucknow have released a report titled “Navigator of Responsible Lending-India”, a statement said on Thursday.
“Focusing on small ticket (up to Rs 15,000) personal and consumer durable loans across both banks and NBFCs (non-banking financial company), the first-of-its-kind research aims to introduce the Indian consumers especially first time borrowers to the concept of responsible lending practices,” it said.
The first edition of the report seeks to set the standards of responsible lending in the country, identifying the key parameters and creating an industry-wide institutional matrix and tool for self-regulation that will serve as the defining contours for responsible lending, it added.
“Within the context of lending and borrowing, both the parties have mutual responsibility towards each other, to fulfil their respective obligations, with overall objective of making seamless experience for all,” said Ranjeet Mudholkar, Vice Chairman and CEO, FPSB India.
“The aim of the study is to establish a framework of responsible and healthy relationship, which could result in secured and pleasant experience mutually.”
The statement said industry players were evaluated through secondary research of customer touch-points such as website, Points-of-Sale (PoS) experience and company literature as well as by speaking to market players across a few geographies for qualitative inputs.
According to the study, Axis Bank, Fullerton Credit India, Home Credit India and Standard Chartered Bank — in the personal loan category — excelled in following a higher degree of responsible lending practices than peers through the “loan application process”, whereas only Standard Chartered Bank and Tata Capital stood out for the “financial inclusion” parameter.
“Responsible lending is about transparent processes, ensuring affordability, transparency of terms and conditions and supporting a borrower to repay loans comfortably,” said Devashish Das Gupta, Associate Professor of Marketing Management, Indian Institute of Management, Lucknow.
“Through this study, our aim has been to explore, evaluate and educate the sector and ‘Navigate’ them towards these best practices.”