New-age lenders enter markets that banks fear: What's their secret sauce?

Digital lending platforms are attracting new-to-credit borrowers and small businesses. Their loan books are running into hundreds of crores, but there are caveats

Lakshmi Iyer, who draws a salary of Rs 7,000 as salesperson at a smartphone showroom in Delhi, had been saving to buy a top-end model worth Rs 37,000, but it was difficult for her as she also shared family expenses. Also, the bank with which she has her savings account declined to give her a credit card. In a fix, she bought the phone on an e-commerce site with an instant loan provided by a digital lending firm.

Digital lending platforms have mushroomed over the past few years to cater for new-to-credit customers who traditional lenders deem too risky to lend.