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Showing posts with label Overdraft INR5000. Show all posts
Showing posts with label Overdraft INR5000. Show all posts

Saturday, April 25, 2015

The next eCommerce Frontier in India – Overdraft Finance for Shoppers


          The chief inspiration for today’s blog Post is the Star Trek Quote – “Space - Where no man has gone before"


          The eCommerce arena in India is witnessing an explosive growth with the pool of Online Shoppers increasing every minute.    
     
          This Forbes article reflects the trend.  

          One of the main reasons as to why shoppers still prefer mom and pop retail stores is the informal overdraft facility.

          Any reasonable sized mom and pop store offers overdraft facilities ranging from INR 250\-to INR5000\-.

          These overdraft facilities are offered without any security and are based on trust.

          The default levels of such overdraft are very low.

          Today’s post explores the market and the process flow for introducing Overdraft facility for online shoppers.

Q: What is an Ovedraft?
Ans:  Overdraft is an Loan arrangement under which a bank extends credit up to a maximum amount (called overdraft limit) against which the account holder can write checks or make withdrawals. An overdraft is a type of revolving loan where deposits (credits) are available for re-borrowing, and interest is charged only on the daily overdraft (debit) balance.

The most famous overdraft facility in India is the PMJDY Overdraft facility.

Q: How different is from EMI financing?
Sr No
Overdraft
EMI Loan
01)
This is like a revolving credit. There can be Debits (Withdrawals) and Deposits (Credits) in the account. Debits (Withdrawals) can be made upto the set limit.
Single Debits (Withdrawal), multiple credits
02)
Interest is charged on the daily withdrawal outstanding at the end of every month.
Interest is collected along with part of the Principal every month.
03)
Petty shopkeepers or Wholesale shopkeepers offer informal overdraft facilities. The interest portion is built into the selling price.
EMI Loans are offered by Banks or financial institutions.


Q) What are the finance options available to Online Shoppers in India?

Ans: The most common finance options in India to Online Shoppers are the EMI loans from the Credit Card Companies.

These EMI options are available only for the respective credit card holders only. New online shoppers cannot avail the EMI options.

Check out on this Google Search for more information on EMI Options.

No Finance Company in India offers Overdraft facilities, more so for online shoppers.

A couple of finance companies do offer EMI loans to online shoppers. Check out here for one such tie up between an eCommerce Company and a Finance Company.

This tie-up is a mix of online and offline model.

It is not a full fledged online model.

The following is a full-fledged model.

01) Customer profiles are created based on eKYC and allot unique customer codes.
02)                  Fix overdraft limits as per risk profile of the customers.
03)                  Obtain NACH (Debit) mandate for recovery of the monthly interest. The upper limit can be fixed as per the Overdraft Limit of the customer.
04)                  Tie up with eCommerce companies wherein the customers can interact with the finance company to finance his/her purchases till the eligible limit.
05)                  Raise alarm when the NACH(Debit) transaction is returned with any reason; financial or non-financial reason.

This Model is most suitable for Finance Companies, though Banks can also consider adopting it.

This model has the following benefits:-
a)    Increase the pool of new customers for eCommerce companies.
b)    Increase the pool of new customers for Finance companies.
c)    Encourage online customers to build a positive credit report.
d)    Encourage Digital India Transactions.
e)    Introduce advanced fraudulent detection techniques.  
f)    Introduce new earning streams for eCommerce/Logistics personnel.
g)    eCommerce companies need not invest for finance.
h)    The processing charges, if any, can be paid by the eCommerce companies if the purchases are beyond a specified level.
                   
Check out this Google search results for the various contours of ecommerce in India
         



Wednesday, August 27, 2014

Pradhan Mantri Jan Dhan Yojana – The Holy Grail of Safe ePayments in India


            The world of Safe ePayments is set to witness a historic event on 28/08/2014 with the roll-out of Pradhan Mantri Jan Dhan Yojana across India.

            Did you know that PM Narendra Modi has sent an email to all Bank Officers in India urging them to whole-heartedly support the Pradhan Mantri Jan Dhan Yojana roll-out.
            The social media’s has been bombarded with regular Jingles

            This is in line with PM’s announcement in his Independence Day speech.

            On activation of the Bank Account, the account holder will be provided with a RuPay Debit Card.
            The scheme name ‘Jan Dhan’ of the Pradhan Mantri Jan Dhan Yojana  was suggested by 7 individuals amongst 6000 enteries received at mygov.nic.in  

            The tagline of the logo says ” Mera Khata – Bhagya Vidhaata” which when translated into English means ” My Bank Account – The road to the Good Fortune”.

            HDFC Ergo has won the mandate to provide an insurance cover of Rs 1 lakh to all RuPay cardholders who can be claimed in case of death or permanent disability.

            An overdraft of INR 5000/- will be allowed after satisfactory operation in the account for 6 months.

            The launch is planned at 76 parallel functions all over India, with the main function being at Delhi presided over by PM Narendra Modi.

            Read all articles on PM here



           
           


            

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