How coronavirus pandemic has derailed Asia’s booming online lending industry, much of it backed by Chinese money

In India there are nearly 500 online lending start-ups, and roughly 160 in Indonesia

But as economies across Asia went into lockdown to limit the spread of the new coronavirus, many borrowers defaulted

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Online lending attracted new players that bet on a digital approach allowing them to lend profitably to entities that did not appeal to banks. Photo: AFP

Published: 11:45am, 3 Jun 2020Updated: 11:50am, 3 Jun 2020

The spring started out rosy for the Indian arm of ClearScore, a company that offers online credit scores and loans.

Within weeks, the coronavirus pandemic had taken hold, drastically changing the picture for the online lending industry in Asia.

“In the second week of March, we were talking about what a great quarter it would be and a month later I had to let go of the team,” said Hrushikesh Mehta, country manager for India at ClearScore.

The UK-based company shuttered its India business on April 13, as 10 out of 14 lending partners withdrew their products within three days of the launch of a nationwide lockdown.

Alternative lending companies and platforms across Asia are scrambling to raise funds and stave off bankruptcy as they face a wave of bad loans.

Sixteen lenders and investors in markets across Asia-Pacific said companies were laying off staff and cutting costs to survive.

Online lending had been one of the hottest sectors in recent years, as new players bet that a digital approach meant they could lend profitably to entities that banks found too costly or bothersome.