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Title: BNPL but ... Walk Don't Run
Authors: Choudhury, Ujjal
Keywords: Debt
Buy Now Pay Later (BNPL)
Digital Loans
Reserve Bank of India (RBI)
Non-Banking Financial Companies (NBFCs)
Bough Breaks
Gross Domestic Product (GDP)
Economic activity
Issue Date: Dec-2021
Publisher: The Financial Research and Trading Laboratory (FRTL), IIM Calcutta
Abstract: Half a century back, when TIME Magazine launched a campaign to rename the Air Force One in response to President Nixon’s visit to China, one of the special mention entries was 'Go Mao Pay Later.' Unlike India, deferred payments were very much a part of the lifestyle in the U.S., where Singer Sewing Machines popularized the installment plan in the 1890s. With globalization and advanced technology, a staggered payments product called 'Buy Now, Pay Later’ (BNPL) came to focus from the early 2010s. It spread in developed and emerging economies, growing in the pandemic era, and India has not been able to buck this trend. In many ways, BNPL is old wine in a new bottle and is popular with younger consumers. An unsecured retail credit product, lenders find it attractive – at the portfolio level, higher margins and spread-out risks make it more profitable. "Alongside the step-change in the use of these products, there has been a rise in concerns about whether BNPL is giving rise to consumer detriment." (HM Treasury 2021, 2). These have become more pronounced after COVID, leading to interventions from consumer advocates and regulators
Description: Biosketch: Ujjal Choudhury is a BFSI professional with more than 44 years of professional experience. He has worked with financial institutions and advisory services firms in India and abroad and currently works as an independent consultant for development partners in the areas of development with a focus on access to finance, strategy and operations, and risk management. A recipient of the British Council India Chevening Scholarship for Senior Executives, he is a graduate of the first batch of IIMC's Certificate Program in General Management (1981-83); and later obtained his PGDBM from IIMC in 1995.
Appears in Collections:Issue 3, December 2021

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