StartupTalky presents Recap’24, a series of exclusive interviews where we connect with founders and industry leaders to reflect on their journey in 2024 and discuss their vision for the future.
Fintech sector of India is going a transformation, with digital lending emerging as a key driver of financial inclusion. High demand for hasstle-free lending pushes companies to adopt AI risk management and automated processes. Technology is reshaping the whole industry, the companies are bridging financial gaps and providing needs of salaried professionals.
In this article of Recap’24, we spotlight Rupee112, a digital lending platform that redefines how salaried employees manage emergency funds. StartupTalky had the chance to speak with Mr. Vikkas Goyal, Founder of Rupee112, about the company’s mission to simplify borrowing through AI solutions. Its rapid growth across 45 cities, and its efforts to promote sustainability with Green Loans. Goyal lastly shared plans into Rupee112’s expansion beyond metro cities and its commitment to transparency and customer-centric innovation.
StartupTalky: What inspired the launch of Rupee112, and how does it address the financial challenges of salaried professionals?
Rupee112 was inspired by the need to revolutionize financial accessibility for salaried professionals across India. By leveraging cutting-edge technology, the company offers instant access to emergency cash through a seamless, 100% digital, and paperless experience. This approach addresses common financial challenges like delayed salaries, unplanned expenses, and restricted access to credit for individuals with less-than-perfect credit scores.
StartupTalky: Rupee112 has seen rapid growth with over 10,00,000 app downloads and operations in 45 cities. How have your AI/ML-powered solutions contributed to this success?
The AI/ML-powered solutions enable Rupee112 to provide a data-driven, digital-first lending approach. These technologies facilitate faster loan approvals, accurate risk assessment, and personalized solutions, ensuring customer satisfaction and operational efficiency, which have been key drivers of the company’s rapid growth.
StartupTalky: Your lending process is 100% digital and paperless. How does this enhance user experience and simplify borrowing?
The fully digital and paperless lending process ensures a quick and hassle-free user experience. Borrowers can apply for loans through the mobile app, with quick disbursal. This eliminates the need for physical documentation, long queues, and complex procedures, making borrowing more convenient and accessible.
StartupTalky: What are Rupee112’s Green Loans, and how do they promote sustainability while meeting customer needs?
Rupee112’s Green Loans are an initiative to promote sustainability by offering inclusive financing solutions for eco-friendly purposes. These loans support environmentally conscious projects while maintaining the company’s commitment to meeting diverse customer needs in a responsible and sustainable manner.
StartupTalky: What challenges did Rupee112 face while entering the lending space, and how did you overcome them?
Entering the lending space involved challenges like gaining trust in a highly competitive market, addressing regulatory requirements, and building a robust technological framework. Rupee112 overcame these obstacles by ensuring transparency, operating in a regulatory-compliant ecosystem, and investing in advanced AI/ML technologies to streamline processes and establish credibility
StartupTalky: Transparency is a core value. How do you ensure customers fully understand the loan process and avoid hidden fees?
Rupee112 ensures transparency by clearly communicating all terms and conditions upfront, providing a breakdown of fees, and avoiding hidden charges. This commitment helps build trust with customers and establishes the company as a reliable financial partner.
StartupTalky: What marketing strategies have been most effective in achieving rapid growth, and can you share any successful growth hacks?
Rupee112 has focused on digital marketing, app-based promotions, and leveraging AI-driven customer segmentation for targeted campaigns. Growth hacks such as simplifying the loan application process and highlighting the 10-minute disbursal feature have also contributed to driving app downloads and user engagement.
StartupTalky: Does Rupee112 plan to expand beyond metro areas into smaller cities? How do you see the potential of these markets?
Yes, Rupee112 has plans to expand beyond metro areas. Smaller cities offer significant potential due to the underserved financial needs of their populations. By leveraging its technology-driven approach, Rupee112 aims to provide accessible and inclusive financial services in these markets.
StartupTalky:What lessons has your team learned since launching, and how will these shape Rupee112’s future?
Not relevant.
StartupTalky: As a fintech founder, what’s one piece of advice you would like to share with aspiring fintech founders looking to enter the financial services industry?
The key advice is to prioritize customer trust by being transparent and regulatory-compliant while leveraging technology to solve real-world financial challenges. Innovate with a focus on user convenience and always ensure that your solutions are inclusive and accessible.
StartupTalky presents Recap’24, a series of exclusive interviews where we connect with founders and industry leaders to reflect on their journey in 2024 and discuss their vision for the future.
Digital lending market in India is experiencing quick growth, followed by high demand for accessible financial solutions. By 2029, this sector is going to see potential expansion, driven by in AI-driven credit assessments and a shift toward paperless, hassle-free lending experiences.
In this article of Recap’24, we feature BharatLoan, a fintech company revolutionizing digital lending for salaried professionals. StartupTalky had the privilege to chat with Mr. Amit Bansal, Founder of BharatLoan, who shared insights into the company’s growth— simplifying the loan approval process to leveraging AI/ML for great customer experiences. Bansal chatted on BharatLoan’s growth, milestones, and vision for the inclusive financial ecosystem. It includs new offering like Green Loans and self-employed financing solutions.
StartupTalky: What inspired the creation of BharatLoan, and how does it address the financial needs of salaried professionals in metro cities?
Mr. Amit Bansal: BharatLoan was inspired by the need to provide salaried professionals in metro cities with quick access to emergency funds. The platform simplifies the borrowing process through a hassle-free, 100% digital experience, offering loans even to those with less-than-perfect credit scores. By focusing on speed, convenience, and accessibility, BharatLoan effectively addresses the financial pressures faced by this demographic.
StartupTalky: What has been BharatLoan’s biggest milestone in 2024, and what factors contributed to its rapid growth?
Mr. Amit Bansal: BharatLoan’s biggest milestone in 2024 is becoming the fastest NBFC to surpass 1 million app downloads in June and the company has now achieved over 5 million app downloads. This achievement reflects its strong customer adoption, driven by a seamless, 100% digital loan process, an inclusive approach to lending, and leveraging AI/ML-powered solutions to streamline loan approvals and enhance customer experience.
StartupTalky: How does your 100% digital and paperless loan process differentiate BharatLoan from traditional lenders and other fintech platforms?
Mr. Amit Bansal: BharatLoan’s fully digital and paperless process eliminates cumbersome paperwork, long approval times, and complex procedures commonly associated with traditional lenders. Its streamlined app-based approach ensures faster approvals and disbursals, offering salaried professionals immediate access to funds. This innovation sets it apart from other platforms by prioritizing speed, convenience, and user experience.
StartupTalky: What challenges did BharatLoan face while entering the traditional lending ecosystem, and how were they overcome?
Mr. Amit Bansal: BharatLoan navigated challenges such as building credibility in a competitive and highly regulated market, earning customer trust, and seamlessly integrating advanced technologies into traditional lending frameworks. These obstacles were transformed into opportunities through unwavering adherence to regulatory compliance, the creation of a secure and trustworthy ecosystem, and the strategic use of AI/ML technologies to provide faster, more reliable, and inclusive loan services.
StartupTalky: AI and ML play a significant role in your operations. How do these technologies enhance customer experience and decision-making?
Mr. Amit Bansal: AI and ML enable BharatLoan to automate credit risk assessments, provide personalized loan offerings, and ensure faster approvals. These technologies help predict borrower behavior, streamline operations, and enhance customer satisfaction by delivering tailored solutions quickly and accurately.
StartupTalky: What new services or loan categories are you planning to introduce and how do they align with your vision of a sustainable future?
Mr. Amit Bansal: BharatLoan is committed to expanding its portfolio with services that align with its vision of creating a sustainable and inclusive financial ecosystem. Recently, the platform introduced Green Loans, designed to provide affordable financing for solar energy solutions and electric vehicles (EVs). This initiative not only promotes environmental sustainability but also makes renewable energy and eco-friendly transportation more accessible to individuals and businesses, contributing to a greener future.
In addition to Green Loans, BharatLoan is planning to launch Self-Employed Loans aimed at empowering entrepreneurs and small business owners. By addressing the unique financial needs of the self-employed segment, these loans will foster economic growth and support individuals in achieving their business aspirations. Together, these offerings reflect BharatLoan’s commitment to driving sustainability and inclusivity while ensuring access to financial products that create a positive impact on both the environment and society.
StartupTalky: Customer satisfaction is critical in the financial services industry. What steps does BharatLoan take to ensure a smooth and positive borrowing experience?
Mr. Amit Bansal: BharatLoan prioritizes customer satisfaction by offering a seamless digital application process, transparent terms with no hidden fees, and quick loan disbursals. It also ensures 24/7 customer support and uses data-driven insights to address customer needs effectively.
StartupTalky: What marketing strategies have been key to achieving over 1 million app downloads? Can you share any specific growth hacks that worked well?
Mr. Amit Bansal: BharatLoan’s marketing success stems from a combination of targeted digital advertising, referral programs, and strategic partnerships. Data-driven campaigns on social media and search engines ensured visibility among salaried professionals, while affiliate programs bring in new customers. engaging content marketing, and festive campaigns further drove downloads and user engagement.
StartupTalky: What trends and opportunities do you see in India’s financial lending industry in the next 2-3 years, and how do you plan to capitalise on them?
Mr. Amit Bansal: BharatLoan foresees opportunities in expanding digital lending services to underserved markets, such as Tier 2 and Tier 3 cities, and offering environmentally focused financing solutions. The company plans to capitalize on these trends by enhancing its AI/ML capabilities, introducing new products like Green Loans, and targeting a broader audience with inclusive and accessible lending solutions.
Growth Hack: BharatLoan fostering higher user retention and encouraging organic sharing. This approach significantly boosted app downloads and customer loyalty
StartupTalky: For aspiring fintech founders, what one piece of advice would you share from your journey with BharatLoan so far?
Mr. Amit Bansal: The key advice is to focus on customer-centric innovation while ensuring strict compliance with regulatory requirements. Build trust through transparency and leverage technology to create seamless and inclusive financial solutions that address real customer challenges.
In this insightful interview, Ms. Shivani Tayal, co-founder of Lark Finserv, shares the inspiration behind launching a fintech company focused on Loans Against Securities (LAS). Lark Finserv offers a digital-first approach to lending, ensuring quick, secure, and transparent processes for borrowers. Ms. Tayal discusses the innovative technology behind the platform, its expansion into Tier-2 and Tier-3 cities, and the company’s commitment to regulatory compliance and customer satisfaction. She also provides valuable advice for aspiring fintech entrepreneurs looking to make their mark in the lending space.
StartupTalky: What inspired you to co-found Lark Finserv, and how did your background in finance influence the company’s vision?
Ms. Tayal: The inspiration for founding Lark Finserv emerged during the COVID-19 pandemic when I saw individuals and businesses facing liquidity crises despite holding valuable securities. At that time personal loans and credit lines also became less accessible due to stringent lending standards. This is when I felt the need for Loans against Securities as a viable alternative.
Coming from a finance background, I had a deep understanding of the financial markets. This helped us design a lending solution that is not only quick and innovative but also safe and reliable.
Our network with people in the industry has helped the company to form strategic partnerships and stay informed about the trends.
StartupTalky: How does Lark Finserv’s technology streamline the process of providing Loans against Securities?
Ms. Tayal: Our platform is built with the user in mind, offering a seamless and transparent experience from start to finish. We have reduced the approval times from days to minutes. Borrowers can apply for loans from the comfort of their own homes, offices, or any location using our interface. We’ve removed the need for physical paperwork, replaced it with a completely digital journey, and provided clear, upfront information about terms and conditions. This level of convenience and transparency is something that traditional lenders have struggled to match.
StartupTalky: What are the key features of Lark’s digital platform that enhance the user experience?
Ms. Tayal: We, at Lark, offer a completely digital journey starting from the onboarding process for customers. By using e-KYC and digital document verification, pledging, e-mandate, and e-sign Lark Finserv eliminates the need for physical paperwork, reducing the time required to onboard new clients from days to just minutes. Our technology allows for real-time fetching and pledging of securities that customers wish to pledge as collateral. Our platform enables instant disbursal of funds. This is achieved through integrations with banking systems and payment gateways, ensuring customers receive their loans quickly without unnecessary delays. Our digital platform is accessible, anytime providing customers the flexibility to apply, track, and manage their loans.
StartupTalky: How does Lark Finserv ensure the security and privacy of financial transactions on its platform?
Ms. Tayal: We at Lark, implement strong encryption protocols to protect data as it travels between the borrower’s device and our servers. Regular security, audits and vulnerability assessments are conducted to identify and mitigate potential risks. We secure all APIs used in our platform with strong authentication, rate limiting, and secure communication channels.
StartupTalky: What differentiates Lark Finserv’s LAS from traditional personal loans in terms of interest rates and liquidity?
Ms. Tayal: Personal loans being unsecured loans have high rates of interest as they carry a higher risk of default. LAS typically offers lower rates compared to traditional personal loans as is collateral-based lending. The presence of collateral reduces the lender’s risk.
Personal loans typically take longer to process because they require a thorough credit check and assessment of the borrower’s creditworthiness whereas LAS provides faster access to funds as the loan is backed by liquid assets that can be easily valued and used as collateral. Lark Finserv’s LAS allows the borrower to leverage his securities within minutes.
StartupTalky: What specific growth metrics has Lark Finserv achieved, including loan disbursal rates and expansion across Tier-2 and Tier-3 cities?
Ms. Tayal: Lark Finserv has enabled seamless onboarding and processing for customers all over India. This has reduced the need for physical visits and paperwork, making it easier for customers to access loans and other financial services from the comfort of their homes. Understanding that many customers in Tier 2 and Tier 3 cities primarily use smartphones to access the internet, Lark Finserv has optimized its platform for mobile use, ensuring a smooth and user-friendly experience.
Lark Finserv’s expansion into Tier 2 and Tier 3 cities has been a significant milestone in broadening its customer base and increasing financial inclusivity. We have more than 500 partners from these cities. Approximately 30% of the cases processed by Lark are from Tier-2 and Tier-3 cities.
StartupTalky: How does a user secure a loan against securities through Lark Finserv, from application to disbursal?
Ms. Tayal: Securing a loan from Lark Finserv involves 6 steps from application to disbursal.
Starting from the application where the borrower provides his, name, number, and PAN number.
Then he does his Digital KYC.
Fetching the Securities from RTA’s.
Pledging the securities.
E-Sign
E-mandate
Once the e-mandate is signed, the client gets the sanction immediately and the loan amount is credited to the borrower’s account in 2 hours.
In Lark’s digital journey, One-Time Passwords (OTPs) play a critical role in ensuring security and verifying the identity of the user at various stages.
StartupTalky: What measures does Lark Finserv take to comply with regulatory requirements and industry standards?
Ms. Tayal: We adopt a comprehensive approach that ensures legal compliance, protects customer interests, and maintains operational integrity. We strictly adhere to the RBI guidelines.
We aim at transparent disclosure of terms and conditions related to the securities used as collateral, regular reporting of financial statements, customer holdings, and other relevant data to the regulatory body.
StartupTalky: How does Lark Finserv collect and incorporate customer feedback into its service offerings?
Ms. Tayal: We, at Lark, understand the importance of customer feedback for continuous product and service improvement. To capture a comprehensive view of customer experiences, as LAS, we offer various channels for customers to provide feedback. We train customer service representatives to solicit feedback during interactions. This is done at the end of a call or chat session, asking customers to rate their experience or provide suggestions for improvement. We are embedding feedback forms directly within the company’s digital platforms allowing customers to provide feedback while interacting with the service. We ensure that based on the client feedback, we keep on improving the product and the service.
StartupTalky: What is your vision for the future of digital lending in India, and how do you see Lark Finserv contributing to this evolution?
Ms. Tayal: India has a $1 trillion lending opportunity against digital assets. Growing financial literacy among the Indian population is increasing the acceptance and understanding of digital financial products. The digital lending market in India is expanding rapidly, with ample opportunities for innovation and growth.
At Lark, our vision is to enable credit against securities through a dynamic digital lending platform, ensuring financial empowerment and inclusivity for all.
Lark Finserv shall continue to be at the forefront of digital lending enhancing its digital platforms with AI-driven personalization, user-friendly interfaces, and seamless customer journeys. By focusing on innovation and customer satisfaction, we will remain competitive in the ever-evolving market.
StartupTalky: What advice would you give to aspiring fintech entrepreneurs looking to enter the lending space?
Ms. Tayal: Entering the fintech lending space can be both exciting and challenging. Due to digital transformation, the LAS market has seen significant growth. Technology has made it easier to evaluate, process, and manage loans against securities online. While digital lending presents significant opportunities, it also comes with a range of challenges that require careful management and strategic planning. Addressing these challenges effectively involves leveraging technology, adhering to regulatory requirements, maintaining high standards of data security, and focusing on customer experience and trust.
A renowned non-banking finance company (NBFC), L&T Finance, has just announced its strategic push into the co-lending industry. This foray is being made possible by a significant partnership with the technology powerhouse CRED.
With the help of this partnership, L&T Finance will be able to expand its operations into the realm of digital lending by providing CRED members with the opportunity to get unsecured personal loans.
The CRED Cash product, which is being enabled by L&T Finance in cooperation with Newtap Finance Private Ltd., will now provide members of CRED with access to credit, as stated in the official statement.
A speedy access to credit is promised by the new arrangement, which will enable members to obtain loans in a matter of minutes. Additionally, the new arrangement will provide members with flexible repayment terms and competitive interest rates.
Sudipta Roy, the Managing Director and Chief Executive Officer of L&T Finance, expressed his excitement about the company’s entry into the co-lending industry by saying, “We are excited to announce our partnership with CRED.”
This affiliation represents LTF’s entry into the co-lending area, which will harness the power of LTF’s considerable experience in the financial services industry, CRED’s large wealthy client base and excellent reputation for trustworthiness, and NewTap’s competence in digital lending and risk assessment. This association will mark LTF’s introduction into the co-lending field.
The Partnership and Its Future
L&T Finance is currently going through a period of tremendous expansion, which coincides with the formation of this collaboration. The loan book of the company experienced year-on-year growth of 11 per cent, eventually reaching INR 6,667 crores in the first quarter of fiscal year 25.
The total disbursements for the quarter amounted to INR 1,178 crores. It is anticipated that the Personal Loans business at L&T Finance will continue on its upward trajectory, which will be driven by strategic alliances, development into new geographical areas, and initiatives to retain customers.
Within the field of co-lending, this relationship between L&T Finance and CRED is well-positioned to establish a new standard of excellence. This platform will provide A sophisticated audience with a simplified and customer-focused loan experience.
Regarding the future of the partnership, Roy stated further that L&T believes that this partnership will further enhance the company’s presence in the digital lending space with a focus on customer experience.
Additionally, the firm thinks that this partnership will provide CRED’s customers with loans in a couple of minutes with flexible repayment tenures, at competitive interest rates, thereby providing customers with a borrowing experience that is both unique and seamless.
To combat the problem of unlicensed actors in the digital lending industry, the Reserve Bank of India (RBI) suggested the establishment of a public registry for digital lending applications (DLAs) during its third committee meeting every six months for FY24-25. More and more people are worried about predatory lending, and this program is an attempt to address those worries and strengthen consumer protection.
Shaktikanta Das, governor of the Reserve Bank of India, emphasized that the proposed repository would provide a complete directory of digital lending applications run by firms approved by the RBI. These regulated businesses must submit and update their repository information regarding their digital lending applications regularly.
According to Das, the repository would be regularly updated with new information submitted by organizations that are regulated. It involves replacing non-compliant or illegally operating digital lending apps with new ones that adhere to regulatory norms.
Loan transactions must take place directly between borrowers and lenders, with terms disclosed clearly and transparently; this program is a part of the RBI’s larger digital lending standards. Strong procedures for resolving complaints and safeguarding borrower information are also highlighted in the guidelines.
Simplifying the World of Online Loans
A significant change in the lending environment has occurred in India, as customers have shifted from visiting bank branches to utilizing mobile phones to borrow money. This is due to the ongoing expansion of internet penetration in the country. Many Indians experienced financial difficulties as a result of banks cutting back on lending after the COVID-19 outbreak.
Online loan apps have grown in popularity to address this need. These online loan marketplaces have mushroomed, providing loans fast (but frequently at exorbitant interest rates) and using aggressive collection tactics. The rules set out by the RBI are ignored by a large number of these apps.
Addressing the Challenges Posed by Unauthorized Lending App
In subsequent years, a multitude of reports were submitted against these lending applications, emphasizing a variety of consumer concerns. Aggressive practices, including high interest rates and aggressive debt collection measures, were reported by many users. Harassment by collection agents, inaccurate statements, and illegal deductions were among the complaints.
In 2022, the Reserve Bank of India (RBI) and the federal government asked Google to impose tougher controls to stop the spread of unlicensed lending apps, in reaction to rising worries about these platforms. Google consequently eliminated 2,500 fake loan applications from the Play Store in December 2023.
Meetings of the Financial Stability and Development Council, which were held in February of this year, also dealt with the matter. Nirmala Sitharaman, the minister of finance, and other high-ranking government officials met to address the problems caused by unlicensed lending applications.
2023 is a year that loan app companies and fintech companies may want to erase from their memory. Fraudulent loan app companies, extortion cases, and a rigorous crackdown by policymakers have meant that the whole cart is being painted black.
However, some loan app companies and fintech companies continue to pin their hopes on a better 2024 with consumer awareness programs, smarter risk-priced products, and collaborations to clean up the much-tarnished image of the sector.
Digitization has hit nearly every aspect of life, and credit availability is not very far behind. A report released by banking regulator Reserve Bank of India showed that loans disbursed by banks and non-banking finance companies through the digital mode multiplied 12 times between 2017 and 2020. With the rise in several disbursements, the grim underbelly of several loan app companies has also been exposed.
Earlier this month, Finance Minister Nirmala Seetharaman intimated the Lok Sabha, saying that between April 2021 and July 2022, Google Play had reviewed up to 4000 loan app companies and had removed more than 2500 loan apps from its Play store. Several debtors have been driven to death by extortion calls and threats, some even being sent morphed pictures of theirs, highlighting the dark side of loan app recovery agents.
However, some of the more reputed companies are trying their best to clean off this image of loan app companies.
“We continuously explain to our end consumers through online as well as offline mediums to not fall into offers that look very attractive or that are available through WhatsApp, SMS, and SMS calls,” said Rajesh Shet, founder of gold loan platform company Sahi Bandhu.
The regulators, too, are putting in all efforts to curb unsolicited apps. Recently, the Ministry of Information and Technology has asked the Reserve Bank of India to have more exhaustive Know-Your-Digital-Finance-App norms.
“This will ensure that only legitimate and scrutinized financial apps can access and use the Indian banking system, and further, if there is any violation of law, the KYDFA process will help in establishing the traceability and origin of the app for action under the law,” Minister for State for Electronics and Information Technology Rajeev Chandrasekhar told the news website Moneycontrol.com.
Risk-based Pricing
The issue of defaults within the loan app universe unravels a chicken-and-egg situation wherein companies are going overboard with selling products, thereby ending up sitting with bad loans on their books.
“Within the fintech industry, to increase the top line, some companies are trying to sell everything possible, even if customers are not looking for a loan or a credit card. They are trying to cross-sell and try to bring in lucrative deals or offers,” said Brijesh Chokhra, co-founder of the instant loan app company Wecredit.
Instant student loan app company Kuhoo Founder and Chief Executive Officer Prashant Bhonsle feels lending needs to be dealt with in a nuanced fashion to make it work for both the company and the customer.
“There are interpretations that a lender will have to do to fully understand, such as the income documents of the customer, the P&L, and the ITR. Some businesses you are evaluating are cash-flow businesses, and some are asset-heavy businesses. How do you interpret that information? And that interpretation is the secret sauce, which varies from lender to lender,” said Bhonsle.
Talking about Kuhoo’s focus area of student loans, the skill was to evaluate the potential of every student to get a job, Bhonsle said.
The regulators are, however, not taking any chances.
Recently, the RBI asked banks and non-banking finance companies to increase the risk weights on commercial loan exposure and credit card exposures to 125% from 100% earlier. Interestingly, several digital lending apps borrow from NBFCs too.
Rating agency ICRA recently observed in its press release that co-lending transactions by medium and small non-banking finance companies were “on the rise, largely seen in the unsecured loan segment, with the counterparty mostly being other NBFCs.”
Attributing to RBI data, Minister of State for Finance Bhagwat Karad said in the Lok Sabha earlier this month that NBFC’s share of credit to the industry was the highest at 12.83 lakh crore INR, registering a 12% rise year on year. This was followed by retail loans at 10.55 lakh crore INR, recording a near 26% rise on the year.
According to Bhonsle, appropriate “risk-based pricing” holds the key to a successful lending business.
“The Indian economy is growing rapidly, and with it, the demand for financial services. The coming years hold immense promise, and innovators across the world should explore these opportunities,” RBI’s Governor Shaktikanta Das said in a speech in September.
“Technological innovation has unprecedented potential to make finance more inclusive, competitive, and robust. It is crucial that technological advancements in the world of Fintech evolve in a responsible manner and are truly beneficial to the people at large. It is, therefore, vital for these innovations to be scalable and interoperable,” he added.
One of the ways to scale up operations for fintech companies would be through mergers, such as the one between the digital lending app Slice and North East Small Finance Bank in October. Touted as a breakthrough strategy to scale up, players are hoping for more such collaborations within the industry.
“I strongly believe that this industry will have to work closely and collaboratively, keeping common interests in mind. There will be competition, but there are common industry concerns and matters that require collaboration. And then, at some stage, there will not be enough room for many players. That’s when one will have to join hands and see who is good at what. Someone may be very good in tech, and someone may be very good in customer onboarding,” said Shet of Sahibandhu.
India’s growth prospects also hold promise as far as credit demand is concerned. Rating agency S&P revised its growth projection for India in 2023–24 to 6.4% from 6% earlier. For the next fiscal, however, it lowered its projection marginally to 6.4% from 6.9% earlier.
“India as an economy is doing so well, and this asset class (real estate) has shown returns year after year. I do see a lot of innovation on the FinTech side, particularly on the home loan side, because it seems like the norm of the regulators to allow the account aggregator framework to become more popular, which means that digital information will be a lot more freely available to many players who are part of the account aggregator framework,” said Pramod Kathuria, founder and CEO of AI-enabled fintech platform for home loans, Easiloans.
Conclusion
Fintech companies and digital lenders are hoping for a more responsible and cheerful 2024. While technological innovations unlock their potential further, the only thing that could put a spanner in their tracks would be unscrupulous lending by themselves.
As the digital lending sector continues to witness remarkable growth and transformation, StartupTalky interacted with Mr. Ankur Handa, Co-Founder and President of Lentra, to discuss the challenges that the digital lending industry currently faces and how Lentra is actively addressing them. Mr. Handa also shed light on the key trends that are shaping the industry.
Lentra, a prominent player in the digital lending arena, has been at the forefront of innovation, pioneering new strategies to maintain a competitive edge. From enhancing accessibility to ensuring data protection compliance, the interaction explored critical aspects of the industry’s growth and development.
StartupTalky: Hello, I am Sayantan, and we are joined by Mr. Ankur Handa, Co-Founder and President of Lentra. Welcome to StartupTalky, Mr. Handa. How are you today?
Mr. Handa: Very well, thank you so much for having me here.
StartupTalky: It is a pleasure to have you here today. I am sure our audience is eager to learn more about Lentra and the digital lending market. Let us dive right in. What key trends do you see in the digital lending industry, and how is Lentra innovating to stay ahead?
Mr. Handa: The lending technology landscape in India is undergoing significant transformation, particularly in the aftermath of the COVID-19 pandemic. One notable shift is the substantial growth in retail credit consumption, now surpassing commercial lending for the first time in history.
What is most striking is the pluralism we see in our credit markets today. Credit is no longer limited to the salaried class or industrialists. It is now accessible to a diverse range of individuals, including street vendors, entrepreneurs, farmers, students, and homemakers. This expanded accessibility is largely attributed to initiatives like Jan Dhan Yojana, Aadhaar, and the widespread penetration of mobile internet. As we move towards a digitally connected world, this inclusivity becomes a significant equalizer for our diverse society.
Another notable trend is the evolution of artificial intelligence (AI). AI is not only revolutionizing the way we assess creditworthiness but also changing the speed and scope of these assessments. It is enabling us to reach a broader customer base and customize services. One impactful application is leveraging business intelligence to address challenges related to accurately targeting potential customers. We are witnessing a shift towards a greater focus on “Government-to-Customer” (G2C) interactions, with initiatives like India Stack playing a pivotal role, particularly in sectors like agriculture and rural development.
The decentralization of credit is another compelling trend. Initiatives like the Open Credit Enablement Network are standardizing the flow of credit among borrowers, lenders, and credit distributors. This move represents a democratization of financial services. As a certified TSP with Samadhi and Credit AI, Lentra leverages extensive cash flow data and a vast network of retailers to facilitate rapid underwriting.
Additionally, co-lending is gaining traction, emphasizing customer-centricity and relationship management. There’s potential for non-banking financial companies (NBFCs) to collaborate with public sector banks, capitalizing on lower costs of funds to develop innovative business models.
Lastly, the growing trend of “APIfication” is reshaping our industry. APIs (Application Programming Interfaces) are being integrated into various aspects of our operations. At Lentra, we have integrated our Lending APIs and Origination journeys with brands, OEMs, dealership chains, and merchant networks.
StartupTalky: Thank you for sharing those trends, Mr. Handa. Now, moving on to challenges in the industry, what are the major challenges that the digital lending industry is currently grappling with, and how is Lentra tackling them?
Mr Handa: One of the key challenges we face is accelerating our reach in a fast-growing market like India. We are not satisfied with a 7% growth rate; we aim for more. To achieve this, we need to revolutionize our digital distribution channels. Unlike in the past when we relied on physical branches, today, customers have numerous digital channels to access loan products.
However, the challenge is tailoring these digital options to diverse customer segments. In rural areas, where a fancy website may not be practical, we need to use voice and other native digitization methods. For millennials and college students, a simple message or WhatsApp can complete the loan journey. Meanwhile, commercial lending to enterprises requires a different approach.
The main challenge and opportunity lie in building robust digital distribution networks. Outside of that, as technology advances, security becomes a growing concern. With India’s growing economy, we anticipate a significant increase in security and fraud attacks by 2030. We must establish the right safeguards to protect our economy.
In contrast, India excels in automation, insights, AI, collaboration with the ecosystem, and product innovation. These areas are not challenges but strengths for us, thanks to initiatives like India Stack. My focus is on addressing security and reimagining digital distribution as the top two long-term challenges.
StartupTalky: All right. Since we have touched on distribution and security, so, my next questions revolve around these aspects. How is Lentra striving to enhance accessibility and inclusivity in digital lending, considering the diverse demographics? What strategies is Lentra employing in this regard?
Mr. Handa: Our primary focus has been close collaboration with government initiatives. While terms like B2B and B2C are well-known, we have been forward-looking with a focus on G2C (Government-to-Customer). We have been early adopters of initiatives like Aadhaar, the Greater India Stack, eSign, and eKYC on our lending platform.
We have also played a role in creating unique products. For example, we worked with a large bank to enable agricultural products like cattle finance loans and Kisan credit cards in just 90 days, benefiting rural farmers in Gujarat.
There is a lot of innovation happening in response to government initiatives. The Account Aggregator, ONDC, OCEN, GeM Sahay, and related products are contributing to financial inclusion.
Financial inclusion has come a long way. Credit card spending and personal loans are at all-time highs. However, we must ensure the sustainability of this credit growth and responsible lending practices. As a technology provider, we aim to support banks in lending responsibly to avoid repeating past mistakes, such as the 2007 crisis. The current NPA levels are at an all-time low of 3.9%, reflecting cleaner books.
Financial inclusion is already happening, with a focus on retail products in both public and private sector banks. As a digital lending enabler, we are committed to creating new product offerings while maintaining sustainable models and robust underwriting, even when using alternate data and algorithms. Our goal is to avoid artificial growth bubbles.
StartupTalky: Thank you for your insights, Mr. Handa. Now, moving on to data protection and security, considering the recent Digital Personal Data Protection Act, 2023, are there additional steps that Lentra needs to take to ensure compliance with the regulation once it is implemented?
Mr. Handa: The key highlights from the Personal Data Protection Act are significant. The most notable aspect is the potential financial penalties, which can go up to 250 crore rupees for each instance of non-compliance. Data processing agreements are mandatory before outsourcing activities to third parties, even for Lentra, requiring scrutiny before using a solution.
The Act also emphasizes periodic data protection impact assessments, mandatory for significant data fiduciaries. The impact assessment focuses on data, application, and infrastructure security, which must be designed for future challenges, not just current ones. India’s growing ecosystem means security threats will also increase.
Details regarding the Act’s implementation may need clarification, likely after the establishment of the Data Protection Board of India, as outlined in the law. Lentra is actively discussing interpretations with banks and their risk teams.
We have taken proactive steps to structure and process consent-based personal data sets for future adaptability. Data storage, encryption, and retention strategies will need reassessment and reimagination. This is an iterative but mandatory process to ensure data security for all Indians.
Security is fundamental for Lentra, with compliance to ISO 27001, ISO 27018, ISO 22301, SOC 1, SOC 2, SOC 3, and AES 256-bit encryption already in place. As we gain more clarity, we will further reinforce and adapt these processes to the evolving ecosystem.
StartupTalky: Since you mentioned the need for further clarification on government policies, especially regarding the Data Protection Act, do you have any specific recommendations for government policies that could better support the growth of Indian startups in general?
Mr. Handa: Absolutely, there is more to be done. India has made significant strides in digital finance and payments, with UPI being a headline story. The scale, speed, and unit economics have amazed the world, and India is at the forefront of the fourth industrial revolution.
The government can play a crucial role in two ways. Firstly, it can further accelerate the positive momentum within India. Secondly, it can help Indian companies, like ours, take their products to the global stage. Initiatives like expanding UPI to other countries are promising.
As a private player, we are eager to take the Indian success story worldwide, but we need a conducive environment. Events like the G20 have been instrumental in promoting the Indian narrative on a global scale.
On the home front, credit needs to be integrated into daily life. The government can encourage this by creating frameworks that enable affordability aspects of lending in various sectors like tourism, health, and education. We have the technology stack ready; now we need the right policy framework.
We envision providing credit throughout a person’s life, from college to retirement, with various credit products offered by banks and other industries. This holistic approach can benefit individuals in rural areas and tier four and five cities. It is time to explore how we can make this a reality in India.
StartupTalky: Mr. Handa, I have one more question, a bit hypothetical. Currently, commodity-based businesses use their commodities as collateral for loans. So, in this digital age, is it conceivable that companies might use data as collateral for securing credit in the near or distant future? What are your thoughts on this possibility?
Mr. Handa: Today, I am in Delhi, where we hosted an event with friends from the banking fraternity. One interesting discussion point was a banker’s dream of creating an all-digital loan against property journeys with no paper involved. I believe this aspiration can become a reality.
I see hope in the increasing digitization of daily life. From making payments through Google Pay to accessing documents in DigiLocker, these building blocks are aligning. It is conceivable that property purchases and land records could end up in a DigiLocker in the future, although this will involve complex security measures.
India Stack has played a crucial role in this journey, starting with Aadhaar’s identity layer, and now expanding to consent and data layers, including account aggregators. As these layers evolve, they will trigger a chain reaction, although predicting the exact outcome is challenging.
One thing is certain: there’s hope, belief, and the right tools, capabilities, and environment to make it happen. If this transformation occurs anywhere in the world, it will be in India. The next step is to create an environment for India’s success story to benefit other communities and countries, promoting inclusive growth and economic development.
While we aim for growth and revenue with ethical practices at Lentra, the ultimate goal is to see both Lentra and India thrive economically.
StartupTalky: As you rightly said, India has definitely made significant strides in digital payments and fintech, surpassing the West in many aspects. So, moving on to my final question, what is your outlook for the industry, and what advice do you have for budding entrepreneurs?
Mr. Handa: I would say take a fearless leap. When I started Lentra with my partner, DV, we were in our fourth year, incubating this idea. I came from a corporate background, having worked at Capgemini and Barclays. It was a pivotal moment, and I am glad I took the chance. Some things cannot be meticulously planned; they unfold in unexpected ways.
Facing challenges, patience, and persistence are crucial. We have adopted an iterative approach, not starting with a grand plan but having a vision and adapting along the way. We have made mistakes but also made more right decisions, which got us this far. We cannot become complacent; curiosity and a hunger for growth are essential.
We are fortunate to thrive in India, where the ecosystem is expanding, attracting global giants like Apple and Google. Indian entrepreneurs have the opportunity to create localized solutions that cater to India’s unique needs. Opportunities surround us, and we should take the risk, have courage, and improvise. It is a conducive environment with ample support and resources available. So, my advice is to go for it.
StartupTalky: Thank you, Mr. Handa, for sharing your valuable insights. I have learned a lot, and I am sure our audience has too. We appreciate your time, and we look forward to future interactions whenever the opportunity arises.
Mr. Handa: My pleasure. Thank you so much for having me. It has been a pleasure interacting with you.
StartupTalky presents Recap’22. This is a series of interviews in which we conduct in-depth discussions with founders & industry leaders to understand their growth in 2022 and their predictions for the future.
Digital lending refers to the process of borrowing and lending money using online platforms and digital tools. This can include peer-to-peer lending platforms, online banks, and traditional financial institutions that offer digital loan applications and services.
Digital lending has become increasingly popular in recent years due to the convenience and speed of the process, as well as the potential for lower borrowing costs. The lending market in India grew to Rs 174.3 lakh crore in March 2022, up by 11.1 % on an annual basis, as compared to March 2021. However, it is important to carefully research and compare different digital lending options to ensure that you are getting the best terms and rates available.
For this Interview, we invited Mr. Ajay Chaurasia, VP of Marketing, Product & Business, RupeeRedee, where we talked about the growth, challenges, insights, and future opportunities in the lending industry.
StartupTalky: Ajay, please tell us about RupeeRedee and the vision & motivation behind starting it.
Ajay Chaurasia: RupeeRedee is a Digital Lending company with an NBFC license to offer lending solutions to Indian customers across the country. We are a tech-enabled company in the financial sector solving gaps in the lending industry with customers.
Even if it’s 2022, India still has a huge population that is not connected to Digital Banking and Lending Solutions. There is a huge population of Underserved customers, who cannot get a loan from a bank or a big NBFC as they might not have ITR or Proper documentation to take a loan.
Also, the ticket size that we offer is customized which allows our users to take loans for small purposes as well. The vision is to reach out to the masses and offer them our services when they are in need and fulfill their short-term dreams.
StartupTalky: Ajay, according to you what are the USPs of your products?
Ajay Chaurasia: Well since we deal in digital lending, we try to customize loan products for the users and we offer many options like multiple tenors, instant availability and credit check, paperless process, strong KYC process, IMPS transfers post-approval.
StartupTalky: Ajay, if we talk about the lending industry in particular, how has the Lending industry changed in recent years and how has RupeeRedee adapted to these changes?
Ajay Chaurasia: Industry has grown more than 2Xin recent years as more and more Indians are coming onboard on such platforms for their needs. Technology has enabled every industry to grow and offer the best experience. India has moved on to a mobile app-driven user base, and because of this, the financial sector has transformed drastically. The entire sector has become fast and is now focused on customer delivery and delightful experience. Our company has also adopted the same and designed the product accordingly to offer the best to customers and compete with our competition.
StartupTalky: How do you stay up-to-date on the latest trends and developments in your industry?
Ajay Chaurasia: RupeeRedee is a part of the IAMAI Fintech convergence council. We also monitor the market, and RBI Guidelines, and thanks to Media stories, we get to know the changes.
StartupTalky: What key metrics do you track to check the company’s growth and performance?
Ajay Chaurasia: In our sector growth is dependent upon multiple factors. User Acquisition, User retention, No of loans Disbursals, Repayments, loan portfolio, Collection efficiency. As a Fintech– NBFC we have to look after all the aspects to track growth and stay in profit.
StartupTalky: You talked about metrics and performances, what were the most significant challenges your company faced in the past year and how did you overcome them?
Ajay Chaurasia: Getting new customers was a challenge in the market as there were so many big giants and players already available. Attracting new customers, building trust and branding was a big challenge for us. We expanded our acquisition channels in the last year. Reached out to the masses via different media. Made a market-fit product to communicate the needs of the customers.
StartupTalky: What are the different strategies you use for marketing? Tell us about any growth hack which you pulled off.
Ajay Chaurasia: We have been using multiple strategies which should be our secret. But broadly we use Affiliate partners, Online campaigns, OEM Channels, Social Media platforms, google, and many publishers-based campaigns to reach out to our audience and deliver the promise.
StartupTalky: What opportunities do you see for future growth in your industry in India and the world? What kind of difference in market behavior have you seen within states in India?
Ajay Chaurasia: Fintech and Lending industry has huge opportunities in the coming time while doing any type of transaction has already become very easy in today’s time which opens up accessibility to consumers in India.
The world is becoming one, we can see companies crossing borders, Cross border payments are becoming easier. Global brands are connected with multiple fintech based on the countries they are providing their services. There is still a huge population in India and the World who are still connected with Mainstream banking.
Every state in India has different consumer behavior, values, culture, and languages. This is why most brands have multilingual apps and websites to connect with consumers. Some states have a high demand for certain products, some states have different income groups. Some have different age groups. We have to analyze each city with Pin Codes while running a business like lending to map the risk of the consumers.
StartupTalky: What lessons did your team learn in the past year and how will these inform your future plans and strategies?
Ajay Chaurasia: We certainly know “what not to do” in the coming year. What we can do is still in the plan, we will try to achieve the same for the growth of the company and the satisfaction of our consumers. There is an area for improvement in everything that we do. We also have plans to improve and be better than last year. Our future plans can be summarized in the below points. ● Increase customer base ● Improve customer satisfaction ● Build new products ● Improve our position in the Industry
StartupTalky: How do you plan to expand the Customers, product, and team base in the future?
Ajay Chaurasia: We have plans to increase, thanks to Digital Media and Networks getting customers today is not a problem. Problem is to convert them by offering the right fit product. We have tied up with some big agencies and networks to boost traffic on our App and Web Platform.
Product and team base always increase with the demand and rise in the business. We have been hiring and doubling the size of the team in the last 1 year. We will see how 2023 unfolds for us.
StartupTalky: One tip that you would like to share with people reading this article who want to get into entrepreneurship?
Ajay Chaurasia: Don’t daydream of only making money, today entrepreneurship has been linked with success and money. But in reality, the path to success is very difficult. Do your research, understand the basic things of the business you want to start, and then take the risk. Improve yourself every day and handle the challenges. If all things go well, you never know, maybe you could be building the next unicorn for India and generating jobs.
We thank Ajay Chaurasia for spending his valuable time and sharing his learnings with all of us.
Singh Neeraj Shekhawat
