Innovative products pay off for e-lending startups

BENGALURU: After payments, digital lending as a space is at the vanguard of innovations, driven by a clutch of startups seeking to take formal lending to a customer segment that never got easy credit from banks. Harnessing data analytics, easy-to-use technology platforms, and well-designed loan products, these entities are breaching the scope of operations of the formal banking network.

From a digital EMI card to instant personal loans and a line-of-credit product, new-age disruptors such as Stashfin, Kissht, and Antworks, along with their established peers Paysense and Moneytap, are trying to generate traction through innovative lending products. Mumbai-based Kissht is financing consumption requirements of low-income households with a digital EMI card that can be used to make payments directly.

“There are around 40 online merchant partners and 2,000 points of presence accepting the Kissht EMI card across businesses like electronic stores, furniture shops and others,” said Krishnan Vishwanathan, chief executive of Kissht. Another Delhi-based startup, Stashfin, is also targeting consumers with income levels between ?20,000 and 1 lakh per month. The startup offers a loan card to consumers in partnership with Visa, and the card may either be used for payments or for cash withdrawal.



“We are doing around ?12 crore of loan amount per month and between 50 and 70% of the line of credit offered gets consumed by the customer,” said Tushar Agarwal, founder of Stashfin. Platforms like these manage to push up consumption as consumers will not need to save for months to make a costly purchase.

“The mindset of people has changed. Previous generations used to save up for months for a purchase. Now with players like us, funds are available easily and consumption does not get pushed,” said Sayali Karanjkar, cofounder of Mumbaibased online lending platform Paysense.

One of the founders said that since the amount offered is small and the tenure is short, it is affordable for the consumer and the risk is also lower for the lender. Further, it builds a credit history for these otherwise ‘thin file’ consumers. Thin file consumers are those that have too little credit history for banks to lend to them.

“We reward good repayment behaviour of the borrowers with better interest rates, which we manage from our four lending partners,” said Agarwal from Stashfin. Anticipating major opportunities here, ex-banker Rajeev Mahajan started Antworks Money last year. The company is hoping to lock ?15 crore in January across products like home loans, personal loans, loan against property and business loans.“We have also applied for a peer-to-peer lending licence so that we can cater to a broad horizon of customers, including those who might not be getting loans from traditional banks or NBFCs,” said Mahajan. While starting a platform might be easy, getting banks as partners is a huge challenge. To prove to the big lenders that they are serious about the business, entities offer a co-lending model. Most of these entities have an NBFC licence through which they lend part of the loan amount themselves.

“We also intend to get into a co-lending partnership with a bank where we agree on the underlying programme and also can disburse from our books 20 to 30% of the loan,” said Mahajan, who was previously with Yes Bank.

The sector has also attracted interest from venture capitalists and major fund houses.

According to data from Tracxn, while most of the players have just raised Series A round. Kissht raised around $12 million in a round led by Fosun, Moneytap attracted $12 million from Sequoia Capital among others, and PaySense got $7.6 million in a round led by Jungle ventures.

Funding has helped them scale up volume through a more powerful technology platform, with improved decision-making abilities and also more partnerships.