A growing number of fintech startups that started as pure-play credit marketplaces or were doing loan originations, are now trying to become lending players themselves.
“We will be using the licence to enter into co-lending with our lending partners, offer better interest rates for our customers and, in this way, put some skin in the game,” said Bala Parthasarathy, chief executive officer, Moneytap, which works with two banks and four NBFC partners.
Moneytap, which started operations in 2016, has created a total loan book of Rs 1,000 crore and has achieved a disbursal run rate of Rs 2,500 crore a year.
Besides Moneytap, other startups, too, have received a lending licence from the regulator.
Mumbai-based CredAble was granted the licence recently. The startup, which is into supply chain financing, plans to create its own book and enter into a co-lending partnership with others.
“To enhance the scalability of our programs and lend comfort to our financial partners, CredAble wanted to participate in the risk it underwrites,” said Nirav Choksi, its chief executive.
Another Noida-based lending startup, Pay Me India, which offers personal loans and short-duration credit to consumers in urgent need for money, has also received an NBFC licence.
The company, founded in 2016, had five NBFC partners.
While a few of them are still working with the startup, Pay Me India wants to slowly create its own book and scale up the scope of operations, said its founder Mahesh Shukla.
“Traditional lenders tend to be operationally very slow and take time, sometimes, to process these loans, but we need to experiment faster and spread our scope of work, hence having our own licence will help,” Shukla said.
Moving to a pure-play lending game with technology ensures a steady source of revenue and helps these startups make money.
As Shukla pointed out, a partner-led model causes a bulk of the profits to go to the partner lender, which it can now retain.
“A book could make sense for two reasons: try some new segments where banks do not go and, second, when you are writing a cheque, others believe you have skin in the game and then there is a better revenue margin there,” said Sanjay Swamy, managing partner, Prime Venture Partners, which is an investor in Moneytap.
Getting a lending licence is one thing, but raising debt and equity constantly to manage business is a different challenge, say industry insiders.
With the liquidity scenario tightening, accessing funds might pose a challenge.
Startups, though, are hoping that market sentiment will improve.
“Now that we raise funds for onward lending through our NBFC, we will create a business strategy around that; one big positive is we have shown that we can underwrite well, so the asset side is taken care of,” said Parthasarathy of Moneytap.
The startup claims only 1.2% of its total loans have gone sour.
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