Author | Russell
Cover | Visual China
India, a country with a population of more than 1.3 billion and only 40 million less than China, has just entered the demographic dividend period.
At present, the average age of the Chinese population is 37 years old, and India is 27 years old.
In the context of tightening regulators in Indonesia and Vietnam and the gambling industry in the Philippines, savvy cash lenders are turning their attention to India in South Asia.
In the past two months, nearly 10 delegations have traveled to India. A system wind controller revealed that there are hundreds of platforms ready to “queue” into India.
Is India the last holy land of cash loans? The place where the Nobel Prize winner Naipaul called “the dark country” is full of mystery and full of unknown challenges…
01 Go, go to India
The Southeast Asian market, once hailed as the “first stop for Chinese cash loans to the sea,” is tightening.
In February 2019, after a taxi driver suicide, the Indonesian Financial Services Authority tightened its supervision.
A large number of local Chinese cash lenders have returned home.
In the Philippines and Vietnam, the situation is not optimistic.
The gambling and cash loan teams in the Philippines are crowded into one area. Recently, the Philippines is vigorously cracking down on local gambling.
“Currently, there is no cash loan for China, but practitioners are also very worried.” Jiang Hanming, a cash lender with operations in Southeast Asia and India, said.
In Vietnam, not long ago, the violent collection triggered two vicious incidents. The related videos were frequently broadcast on local TV stations in Vietnam. The Vietnamese police took the shot and “grabbed two Chinese cash loan companies”.
The domestic situation is tightening, Southeast Asia is doing well, and the savvy cash loan team is looking for the next export. They are aiming at India.
There are many reasons why India is being optimistic.
First of all, there is no doubt the population.
As of 2018, India has a population of 1.353 billion. In contrast, Indonesia is 268 million, Vietnam is more than 90 million, and the Philippines is 107 million.
A large population base means a big market.
The Boston Consulting Group predicts that by 2023, online lending in India will be $350 billion, nearly five times that of 2018.
Secondly, India’s credit information system is still not perfect, but it has its unique advantages.
The World Bank report shows that in 2018, India’s credit history is easy to access, ranking 29th in the world.
The Indian government’s biometric identification system collects the iris of residents and binds their mobile phone number and bank account number. This data can be called when borrowing.
The population base is large, infrastructure and financial facilities are relatively complete, and unlike Southeast Asia, India is not an uncultivated land.
Under such circumstances, many Chinese credit practitioners are eager to try.
In February 2019, a message came out: Kunlun Wanwei was preparing to invest in the Indian cash loan company Krazybee, which is known as the “Indian version of the stage music” after clearing the store.
Before this, Lexin and Xiaomi have invested in Krazybee.
At present, Chinese credit practitioners in India are mainly concentrated in Gurgaon(Satellite City, New Delhi), Bangalore and Mumbai .
“After June this year, India has become even hotter. In the last two months, at least 10 delegations came to India,” said Luo Heping, a local system controller in India.
At present, a six-day, five-night Indian delegation on the market has a price of more than 20,000 yuan.
“Some companies have been very eager to go. The responsible person participated in the delegation to India. When they left, they were already registered, and even recruited.” Luo Heping found that this is even more enthusiastic than the Southeast Asian market.
Industry sources estimate that at present, there are already 20 Chinese cash lending companies in India, and more than 100 are preparing to land.
To next year, this number may increase to 200.
India, will it be the last holy land of Chinese cash loans?
02 Market Features
Ruo Heping has been doing business in the Indian market for one year. His judgment on this market is: “You can do it, but it is obviously not as profitable as domestic cash loans.”
This market is very different from the Southeast Asian market: Regulatory has already planned the runway, and we don’t want to make the market worse when it comes up.
At the moment, everyone is most concerned about, first of all, interest rates.
“India’s annualized interest rate red line is 36% like China.” After examining more than a dozen Indian cash loans, cash loan practitioner Li Han reached this conclusion.
Although the Indian government has no explicit provisions for this, it is the default red line for the local credit industry.
But in addition to 36%, India also allows manual audits, face recognition and other fees. Currently, the government does not set an upper limit.” Li Han said.
In other words, it is possible to add some wind control costs on a 36% basis – and this has room for maneuverability.
At present, the annualized interest rate of Chinese cash-selling players in India is ranging from 24% to 300%, mostly in the range of 200% to 300%.
Everyone is not too daring to set the interest rate too high. One is afraid of supervision, and the other is that users are not going to borrow. The data is not good.
At present, the entire industry is relatively restrained.
Second, everyone cares about the amount of money.
In 2018, the disposable income of Indians was about 12,600 yuan. In the same year, China’s per capita disposable income was 28,000 yuan.
In other words, the per capita disposable income of India is 45 percent of China’s.
Therefore, the amount of Indian cash loans is lower than that of China. Generally, only one-third of China’s cash is converted into RMB, and long-term products can be tens of thousands, while short-term products are between 300 yuan and 500 yuan.
As for the repayment period, long-term products are generally one year, and short-term products are between half a month and one month.
Finally, the overdue rate of Indian users is not high, and there have been no gangs that have been maliciously defrauded.
According to the descriptions of many practitioners, the main characteristics of Indian lending users are: 20-30 years old, unmarried, have formal jobs, monthly income is about 2-3 thousand yuan, and borrowing money is for temporary turnover emergency.
A number of practitioners revealed that the current rate of this market is between 30% and 40%.
“Our team has received more than 10,000 cases. Up to now, no Indian user has directly said that ‘I just don’t pay back!’” Zhang Hong said that India has not seen malicious fraud.
But relatively speaking, India’s recall rate is lower than that of China.
Zhang Hong observed a single month of data and found that the call rate of Indian phones can reach 40%. In China, the first day’s connection rate is only 18% to 23%, and the highest is difficult to exceed 25%.
The connection rate is high, why is the recall rate low?
In China, the rate of return on the first day is the highest, and then the lower the rate.
But in India, the peak of the return will occur on the 3rd, 4th to 10th day of the overdue.
“Many Indians don’t pay back because they are really poor and have no power. They can only wait until the wages are paid back.” Zhang Hong said that the Indian market has the typical characteristics of “payday loans.”
“In addition, the Indians’ time concept is weak, and many people don’t understand the overdue consequences and the collection actions they will face,” he said.
In this market situation, what is the real profitability of Indian cash loans?
A head cash lending platform has been in India for a year, and the core data they revealed is: 8% monthly profit. In other words, the annual profit is close to 100%.
“Overall, the Indian market can make money, but it will not be as bloodthirsty and profiteering as the Chinese market.” Li Han said.
In the most insane Chinese cash loan, 10 million yuan was invested at the beginning of the year, and even 100 million yuan can be recovered at the end of the year.
“Because India’s landing costs are very high, annualized incomes of 50% to 100% are very good; if they are not doing well, they may only be 20% to 30%, or even losses.” Li Han said.
He said that most of the current profits are large companies with a loan size of more than $100 million. “Most Chinese companies have yet to make money.”
03 Challenge
The Indian market does have a chance, but the money here is not good.
India is famous among backpackers and evaluates polarization: either heaven or hell.
* Some of the respondents in the text are pseudonyms.