The electric vehicle (EV) sector in India is experiencing an upward trajectory, with its sales peaking at a record of 1.96million units, led by a steady 17% growth in FY2025. The last two years have been particularly profitable for the industry owing to the growing consumer shift towards e-mobility. What is more, this surge is propelled by a combination of government-centric incentives, environmental awareness and an emerging middle-class striving to attain cost-effective and sustainable transportation alternatives.
Given that EVs are seeping into the rural and remote belts of the country, Digital Non-Banking Financial Companies (NBFCs) are becoming influential in bridging an age-old financial gap. By deploying technology to streamline loan processes, these institutions are actively making EVs accessible for a wider set of demographic. Their approach further contributes to employment generation and environmental growth. To begin with, NBFCs require minimal documentation and offer quick disbursement. As opposed to traditional financial institutions, they do not include lengthy approvals. Rather, they aptly utilise digital KYC (Know Your Customer) processes, Aadhaar-based authentication and e-signatures to accelerate loan approvals. Such an efficiency is greatly beneficial for those in rural regions who may lack access to conventional banking infrastructure.? A range of NBFCs today have also moved towards mobile-first platforms, making it easier for borrowers to apply for loans at the click of a button in regional languages. This is especially effective as it mitigates the hassles of physical paperwork and having the know-how of banking terminology.
In a country where a huge population yet remains outside the formal credit ecosystem, digital NBFCs are turning to alternative credit scoring. Its models evaluate mobile usage, transaction patterns and utility bills, enabling individuals to receive loans without a conventional credit history. Likewise, NBFCs are well-set to identify the diverse financial necessities of EV buyers, as they often modify loan products with flexible repayment terms and viable interest rates. Another key advantage of digital NBFCs is their capacity to join forces with traditional banks via co-lending models. Its partnerships assimilate the banks’ financial stability with NBFCs technical prowess, leading to an inclusive lending ecosystem. Digital NBFCs similarly play a pivotal role in enhancing financial aid services to underserved populations. They provide loans for electric two-wheelers and three-wheelers, which are more apt to the transportation needs and economic realities of these communities, thereby boosting mobility and inclusion.
Progressively, NBFCs are embedding financing directly at the point of EV purchase, be it online or in physical showrooms, hence creating a seamless ‘Buy Now, Pay Later’ experience for consumers. In some instances, buyers can even walk in, choose a vehicle and walk out financed in under an hour. NBFCs have also commenced blending financing with vitalservices like vehicle insurance, roadside assistance and maintenance. These value-added packages further lessen stress for first-time EV owners and simplify long-standing ownership costs.
At present, the government of India has proposed an ambitious target of accomplishing 30% EV penetration by 2030, which accentuates the sector’s core potential. Its progress will not just sway the nation’s economy positively but also bring to light notable social and environmental benefits, further accentuating economic growth along low-carbon pathways and expediting the net zero vision of 2070. In line with this, Digital NBFCs are bound to be focal to this massive transition, providing suitable financing solutions.
Irrespective of the strengths of NBFCs, the current infrastructure pertaining to EV charging stations continues to pose a challenge. In the upcoming times, it will be necessary to build it further in order to supplement large-scale adoption. The dearth of financial literacy and awareness is an equal barrier, however, NBFCs can cater to this need by making educational materials and guidance available to consumers to make sound financial decisions about EV procurements. That said, unswerving governmental support through subsidies and encouraging policies are key to sustain the development of the EV sector. Joint efforts among the government, financial institutions and industry stakeholders will prove to be beneficial to nurture a conducive environment for fast EV adoption.
Farther ahead, the role of NBFCs could encompass battery-specific financing models, such as battery leasing or swapping, especially as battery replacement becomes a basic concern in the EV lifecycle. New-age technologies like AI and Block chain are likely to upgrade digital lending. AI may aid in augmenting fraud prevention and underwriting accuracy, while Block chain could enable completely transparent, tamper-proof loan contracts. To rightly accelerate India’s EV revolution, stakeholders must continue to embrace digital-first lending models that are all-encompassing, rapid and seamless.
(The author, Nehal Gupta, is the founder and managing director of Accelerated Money For U.)
