In an attempt to bring more transparency while approving mortgages, loans against property and personal loans,GE Money India on Wednesday introduced a 15-day loan-back guarantee.
Under a campaign named, Har baat saaf saaf (clear statements), the non-banking financial company (NBFC) will give its customers the option of returning a loan within 15 days “if they find a gap in delivery of key terms & services versus the promise made to them during the process of applying for the loan”, a company release said.
The NBFC will not charge any processing fee or penalty if a loan is turned down by the customer in that period. GE Money also will provide every customer with a document called the “Most Important Document”, which will contain paperwork on all the important terms of the loan and a simplified tariff card even before the customer actually avails of the loan.
Clean play: The move by GE Money India aims at bringing transparency in approving mortgages, loans against property and personal loans.
With this campaign, GE Money is trying to tap the business of lending small-ticket loans, industry watchers feel.
Of late, the Indian NBFCs have been the subject of many a debate. This is primarily because Indian NBFCs are also in the business of so called subprime loans, where they lend unsecured small-ticket loans to customer with inadequate ability to pay. There is no final industry estimate about the size of the sector because the players are concerned about disclosing their asset size.
But industry analysts estimate the size of the business could be around $8 (Rs31,440 crore)-10 billion.
With the advent of new players, credit losses have increased to 10% of the total industry size, as compared with 3-4% a year back. Critics blame it on the overeagerness of the players in a competitive space.
A rival NBFC said that GE Money’s move only provides a warranty clause but does not improve product quality. An official of this Mumbai-based NBFC, who did not wish to be named, pointed out that there have been several cases where a customer has been misled because of outsourcing.