Fintech firms witness rise in demand for healthcare loans
MUMBAI: Fintech lenders have seen rising demand for healthcare loans in the past three months, executives at these companies said, as the spreading coronavirus outbreak has led to a surge in emergency medical expenses.
With a vast majority of Indians having no or scanty health insurance coverage, many are forced to pay for their own treatment. Some of them are now turning to these lenders for quick funds.
Healthcare lender HealthFin said loan demand tripled in AprilJune, most of it for 3-12 month duration. Long-term loans are usually availed for planned treatments or surgeries. “People need loans at short notice for healthcare needs, and such loans come as an exact solution for this particular issue of arranging funds at the quickest time possible,” chief executive officer Parvaiz Hussain said. HealthFin ties up with hospitals, which bear the interest cost of the treatment expense.
According to Hussain, hospitals are comfortable with this since it increases occupancies, and costs less than 10% of their marketing budget to get new customers. HealthFin has added over 650 hospitals since February, Hussain said.
According to the World Health Organization, financing healthcare through out-of-pocket payments results in “catastrophic health expenditure and impoverishment” in many Asian countries, particularly India.
“Out-of-pocket payments remain common in India, where only 15% of the population is covered by health insurance. In 2014, such payments were estimated to account for 62% of total health expenditure,” the WHO said in a 2017 report.
According to Prithvi Chandrasekhar, head of risk and analytics at InCred, a fintech lender, overall demand for loans other than healthcare has declined. He added that procedural and planned health-related spending has declined except for those that are essential.
Mint reported on July 8 about several hospitals denying cashless insurance claim facilities for Covid-19 patients, forcing people to frantically arrange large sums of cash.
Another fintech firm MoneyTap, which provides loans for various purposes, said medical loan demand has soared, while other segments have seen a fall. The company provides quick unsecured line of credit of up to ₹5 lakh to salaried and self-employed customers. Customers can avail of this line of credit free of cost, but when they draw an amount, it attracts 13-25% of interest on the amount drawn. MoneyTap is in talks to sign up hospitals through aggregators for no-cost loans.
Anuj Kacker, co-founder of MoneyTap, said while his company has not registered many new customers in the recent months, higher credit offtake by existing customers has boosted volumes.