Now you can get loan on bitcoins | Economic Times

Own a bitcoin? Get a loan, if you need one, without any of the hassles that involve asking a bank.Some ‘crypto banks’ have started offering credit lines to people who have digital currencies in their investment portfolios. People owning cryptos such as bitcoin, ethereum or ripple can pledge their holdings with crypto banks to get loans up to 50-60% of the asset value.These loans come with no specific tenure and can be repaid any time. Interest at 12-15% per annum is lower than 12-24% charged by the banks on personal loans, along with a processing fee in the range of 2-3%.Crypto-focused institutions such as EasyFi Network, Valud and Cashaa, among others, have started their lending operations in India. “The loan is instant, because it’s collateralised and we don’t check the creditworthiness of the borrower,” says Darshan Bathija, CEO of Vauld, which has booked over $25 million worth of crypto loans over the past few months. “The line of credit is given against borrowers’ crypto holdings. So, if any crypto-holder wants liquidity, but doesn’t want to sell off his holdings, he can just pledge it and get a loan. Crypto loans are catching up in India,” he adds.82124972So, if you own bitcoin, currently valued at Rs 45 lakh, you can pledge it with a crypto bank and get a loan of up to Rs 30 lakh instantaneously. The loan is disbursed into your crypto account using ‘stablecoins’ like USDT — the value of which is pegged to US dollar. The borrower can then sell the stablecoin on a crypto exchange to get fiat money (rupee, in this case) in his normal bank account.An email query sent to the Reserve Bank of India has not been answered till the time of going to press.The Centre’s decision to not outlaw cryptocurrency has emboldened various players such as exchanges, crypto banks, rating agencies and protocol manufacturers to expand their business in India. Cashaa has tied up with United, a Jaipur-based multistate cooperative society, to form a brick-and-mortar crypto bank called Unicas.Decentralised FinanceThe bank allows customers to deal in cryptocurrencies seamlessly, earn 9-10% interest on their crypto deposits and also get cash loans. Its branches are operational in Rajasthan, Gujarat and New Delhi.“A lot of our borrowers are businessmen who want to raise funds for their business… they monetise the cryptos lying idle in the portfolios to raise capital,” says Kumar Gaurav, CEO of Cashaa.Players like Cashaa and Vauld also offer crypto deposits, which work like a normal savings account with a bank. Crypto deposit accounts earn up to 4% interest for the account holder. Offering banking and financial services with cryptos form the basis of decentralised finance (or DeFi). Using cryptos as the underlying asset, DeFi has the potential to create new financial products and services on the blockchain, say experts.EasyFi Network, for example, is planning to launch ‘payday loans’ in India this quarter. “This product will be for working professionals and salaried employees,” says Anshul Dhir, cofounder, EasyFi Network.