The Buy-Now-Pay-Later schemes are a strategy that either enables customers to defer payment of the complete bill for a predetermined amount of time and pay later or breaks up the total price into a series of interest-free installments that may be paid over a period of time. To know more about debt consolidation in the fintech industry, Harish B. Parmar, Founder, SingleDebt, had an interaction with Srajan Agarwal of Elets News Network (ENN).
What do you think about the debt consolidation, and how does it work in India?
The debt consolidation method of repayment involves taking out a new loan in order to repay the existing debt. As we all know, India is a country where the majority of the population are not well-literate with financial knowledge. They opt for debt consolidation with the intention of repaying the actual debt. But it does not work like this, it is another trap where people are stuck in a slander of new debt.
However, to understand it more clearly, it is a better way of consolidating multiple high-interest debts into one, thus saving you money and reducing your debt burden. People are still not aware about the solution given to them when they are unable to repay their loans or other liabilities. It is very important to educate them, with at least basic knowledge in regard to debt management in India.
SingleDebt is the only Debt Management company in India providing affordable Debt Management solutions to repay your debts without affecting your financial stability. In addition to helping our clients and viewers with the process of repaying their debts, we provide them with financial literacy education as well.
What are the legal remedies available to the defaulters in case of harassment by recovery agents?
We are all aware of the increasing cases of oppressive harassment and unethical conduct of recovery agents seeking to recoup loans from borrowers. Over the past few years, there have been several cases of people committing suicide due to harsh harassment by recovery agents. The recovery agents have affirmed fear among the people in India. The victims feel humiliated when recovery agents make illegal attempts to disgrace them.
However, we who look into matters and investigate the severity of harassment caused to the clients by recovery agents. As part of our work at SingleDebt, we are not only focused on achieving debt management solutions. We are also having a professional team of paralegals and advocates who take legal action against recovery agents to protect our clients’ reputations and rights. Using legal remedies, one should understand the Do’s and Don’t of entertaining the recovery agents.
Everyone should be aware of the RBI guidelines put forth against the illegal harassment done by them. Additionally, you can file an official complaint with the police, to stop the harassment from third-party agents. An official notice is issued to the banks regarding the malpractice done by the recovery agents. Additionally, we represent the client during court proceedings for defamation suits filed against the recovery agents.
How can defaulters safeguard their rights against recovery agents and the harassment?
You would have heard about incidents of recovery agents harassing people to an extent where the borrowers end up taking their lives. In India there are more than 10,000 agencies that are operating to collect money from the borrower. The third-party agency extracts borrower’s information through technology and harasses them. They’re literally non-qualified agents coming up with illegal techniques to intimidate people.
Borrowers should be aware of their rights when they cannot repay loans and are harassed by a recovery agent. They are harassed illegally, and defaulters can file a police complaint along with evidence by recording the conversation, file a suit against the bank and the recovery agents or simply complain to the RBI or the banking ombudsman.
How do you think buy now pay later model is taking a pace in Indian Ecosystem?
Since there has been a huge growth in the FinTech industry, Buy Now, Pay Later (BNPL) has been at the forefront of the new financial innovation in the market. It is a method used to revolutionise the experience of online shopping and payment ecosystems in India.
The BNPL schemes are a strategy that either enables you to defer payment of the complete bill for a predetermined amount of time and pay later or breaks up the total price into a series of interest-free installments that may be paid over a period of time.
If you make intelligent use of the system, you will be able to keep the price of the thing that you buy online the same. In the event that you do not, it has the potential to have a catastrophic influence on your financial wellbeing.
Putting off payment on a pricey item until the next year may seem like a good idea at the time but ask yourself if you’ll still be able to manage financially if you do that.
Using the BNPL option and not paying off your entire account, you will be obliged to make a minimum monthly repayment, which will include interest and any late fee charges that may apply. The purchase date is frequently used as the starting point for calculating interest, with the period of time without interest being backdated. When it comes to BNPL plans, the penalties for missed payments are typically rather severe.
BNPL is a debt time bomb that will cause financial problems to the financial ecosystem as the sub-prime debt bomb impacted the social fabric of people’s financial life.
If you’re one of those who have been trapped in a scheme of BNPL and concluded to debt, it is advised to seek help from a debt counselor who can help to pay off your debt at an urge so that no stress should affect your daily well-being.
According to you, what is the importance of credit score in India?
Credit score is the most important instrument for obtaining financial assistance from banks. It is the first thing that lenders check when you apply for a loan in India. Banks or NBFCs assess your credit score and offer you a loan based on it. If your credit score is below 600, there are high chances of loan rejection. If your score is high and above 750 to 900, you may get the advantage of getting a higher credit limit, lower interest rates, and purchasing and negotiating power.
Your credit score may have a huge impact, if you don’t pay your loan dues on time. Missing or ignoring even a single payment can have a huge impact on your credit score. We recommend our clients to repay your debts even if it is paid slowly, but it may improve your credit score gradually. Certainly, with the current growth in the FinTech industry there are many loan applications coming up with a new technique of assessing your credit score. The company does not check your credit score but rather looks at your payment history. This means your eligibility is verified based on data, which evolves through your past payments and looks at your receivables. These applications use such techniques to provide loans of lower amounts.