Residents shop from a store next to a home with a mural painted by artists from Delhi Art Street in New Delhi, India on December 2. Photo: AFP

India is becoming the next hotspot for consumer credit companies from China, due to the high demand that local traditional financing services are failing to meet, growing online payment coverage as well as relatively loose regulations, according to experts.

Mi Credit, launched by China's Xiaomi, a top smartphone vendor in India, is one of the companies that recently joined the growing fintech wave in India. It claims that it allows users to get up to 100,000 rupees ($1,408) within 5 minutes, and users are required only to provide proof of address, permanent account number card and bank details, according to the company's introduction on the Google Appstore. 

The service has been running in India in a pilot format, and it made loans of more than 280 million rupees in November, according to a company statement sent to the Global Times on Tuesday. 

"It is similar to the fintech models in China a few years ago," Zhang Yu, a senior analyst from the Beijing-based consultancy iResearch, told the Global Times on Tuesday. "It is targeting the growing population of young professionals, whose increasing financing demands are unmet by credit cards in India."

Akin to China, the penetration of credit cards in India remains low, with only about two out of 100 people having a credit card in 2019, according to a report by investment bank JPMorgan.

With the experience gained in China, companies can easily apply the model to the Indian market, Zhang said. 

"Apart from the company's equity, financing companies are most likely to collaborate with local financial institutions like large banks and trust funds for money," Zhang noted. 

The loans are also made possible by the fast-growing coverage of online payments in India. The number of digital-payment acceptance locations reached 1.5 million in 2016 to 2017, according to a report by consultancy KPMG.

The number of merchants accepting digital payments is expected to exceed 10 million the next two or three years, the same report said. 

"Online payment coverage is crucial for consumer credit," Zhang said. "All data for the determination of the user's credit can be collected online."

Mi Credit is cooperating with local fintechs including Aditya Birla Finance, Money View, EarlySalary, Zestmoney and CreditVidya. These companies help in identifying creditworthiness, according to a statement from Xiaomi sent to the Global Times on Tuesday.