IndiaLends founders Gaurav Chopra (left) and Mayank Kachhwaha
Mumbai-based Andrews Azariahs was a happy man after a loan of Rs 800,000 was recently credited into his account within two days of the request, that too with a holiday in between.
“I needed the loan urgently. It understood my urgency and took immediate steps, and followed up a lot with the banks. It kept me updated about the status of my loan request,” said Azariahs. He was referring to IndiaLends, a Delhi-based fintech company.
IndiaLends, an online credit underwriting and analytics platform, helps consumers access relevant unsecured credit products offered by various financial institutions, based on credit profiles of the consumers.
The company was set-up in March 2015 by Gaurav Chopra and Mayank Kachhwaha — both earlier worked at Capital One. IndiaLends has recently raised $10 million in a Series B funding round led by London-based ACP Partners. Existing investors American Express Ventures, DSG Consumer Partners and AdvantEdge Partners along with the India-focused Chinese fund, Ganesh Ventures were the other participants.
“Price comparison platforms have enjoyed success as consumer-driven product offerings, with a number of strong players in the US, Europe and Southeast Asia. India is set to enter a phase of rapid retail credit expansion; IndiaLends is perfectly positioned to capitalise on this growth,” said Alok Oberoi, founder of ACP Partners.
India is an underserved market with the approval rate for consumer credit below 10 per cent, said Gaurav Chopra. Moreover, people in the country are conservative about financial choices and usually avoid using financial products apart from the conventional ones. One of the major causes for this is lack of financial knowledge, he said.
IndiaLends gives borrowers access to unsecured credit products (loans, micro-loans, and credit cards) by connecting them with institutional lenders (banks and non-banking financial companies). “We are a ‘mass market full-service player’. From the mass market perspective, IndiaLends has a presence across India and, from the full-service perspective, we offer products starting from as low as Rs 15,000 loan to Rs 5 million unsecured credit,” said Chopra.
IndiaLends claims to be uniquely positioned to serve customers by providing the best solutions to their credit problems. It recommends a product at each stage of the customer’s credit life cycle (new to credit -building your credit - good credit).
Moreover, traditional credit providers process only the credit history to assess the credit risk of a customer. IndiaLends, however, does not only assess the credit history but also make use of machine learning to judge creditworthiness of a customer.
This has enabled the company to serve those who usually do not get access to credit products. “We process information captured through digital sources and offer customised recommendations based on their (customers’) credit profile,” said Chopra, who is also the CEO of IndiaLends.
IndiaLends has helped disburse over Rs 5 billion in personal loans so far and helped nearly 200,000 consumers in securing approvals for credit cards. It has over two million customers.
The company also provides value-added services like free monthly credit reports to borrowers in collaboration with Experian credit bureau.
IndiaLends has products with interest rates ranging from 11 per cent to 25 per cent. The NPA level is under 1 per cent for interest rates less than 14 per cent and it hovers around 2 to 3 per cent in cases where interest rates range between 15 and 20 per cent. The company claims its NPA levels to be “decent”.
The consumer lending space in India is expected to be a $1.2 trillion opportunity for the organised lenders, implying a 22 per cent compound annual growth rate over the next three years. The retail loans accounted for 20 per cent of loans disbursed in FY17, and the share is increasing.
Indialends claims to be uniquely positioned to tap this opportunity by using technology, specifically by reducing loan origination cost, better risk assessment capabilities by using alternate data captured during the customer’s digital journey, low customer acquisition cost, and faster loan processing because of a completely digital process.
The company has a presence in 45 cities and it plans to expand to nearly 105 cities by March 2019. It has also set a target to disburse loans worth Rs 10 billion by the end of this financial year.
The fintech firm operates in a capital-light business model, making revenues on loan and credit card transactions (charged to lenders in return for marketing, underwriting and credit analytics services). It had generated a revenue of Rs 150 million in FY18.
With 300 employees already on its payroll, the Delhi-based firm plans increasing the headcount to around 750 in 12 months.
IndiaLends in May 2015 had raised an undisclosed amount as seed funding from DSG consumer partners and angel investor Siddharth Parekh. Thereafter, in October 2015, it had raised $1 million in a bridge investment round led by DSG Consumer Partners, Siddharth Parekh and Gautham Radhakrishnan.
In December 2015, IndiaLends had raised $4.6 million from American Express Ventures, with DSG Consumer Partners, Chinese investment firm Cyber Carrier VC and AdvantEdge Partners participating in the round.
“We plan to utilise the fresh funds to enhance our technology platform, increase marketing footprint and hire more talent,” added Chopra.
Alternative data hold the key
Sunil Goyal, Director and fund manager, Yournest
India is a credit-starved market, even after scores of lenders present — the major reason being lack of reliable data to underwrite risk. Leveraging alternative data and using machine learning to identify patterns and risks open up the huge hitherto untapped market. What will differentiate marketplace lenders like IndiaLends is the ability to tap into ever increasing sources of alternative data (utility data, payments data, Tax data) and educate lenders to underwrite risk using them.