Consumers are now “digitally ready” to benefit from an online loan: CEO of CASHe
The concept of taking out a loan is reshaping in India, especially with the government’s digital push. Almost 50% of loan seekers in India with internet access actually received a digital loan in the past 12 months, Ketan Patel, CEO, CASHe Recount Aparajita Gupta in an interview.
Although there is a digital push on the government side, people are generally hesitant to take loans online. Have you observed such a trend?
No, on the contrary, India’s aggressive push to go digital has everyone excited, especially the fintech industry. With the advent of digital lending, financial service providers in the fintech space are now able to deliver better products to underserved customers in a faster, more cost effective and more engaging manner. The government is playing an active role in promoting financial inclusion, digitization and start-up activity, which has led to the introduction of policy initiatives, which provide a solid foundation for the FinTech sector in India. Almost 50% of loan seekers in India with internet access have actually received a digital loan in the past 12 months. Consumers are now “digitally ready” for different types of products. They often use search engines and loan companies to conduct research and research loan prices and eligibility criteria. The growth prospects for digital lending are so huge in India that, according to a recent BCG report, it is estimated that total retail loans, which could be disbursed digitally, could exceed $ 1 trillion in the next five years. . In addition, digital disbursements over the next five years would be nearly five times higher than current levels.
How big is your loan portfolio and how quickly has it grown?
We have disbursed over Rs 1,200 crore in loans since the start of our operations in 2016 and have been profitable month to month since November 2018. CASHe has disbursed 400,000 loans in total to over 100,000 clients with an average daily disbursement of Rs 2.5 crore. Our growth is 100% year over year. Having already recorded an annual execution rate of over Rs 500 crore during the last fiscal year, we are on the verge of reaching the disbursement target of Rs 1000 crore during fiscal year 2019-2020.
Who are your target customers and why?
About 95 percent of our clients are in our target age range of 22 to 38. India has the largest young workforce in the world. Due to this large young population, India is expected to become one of the world’s great economic superpowers. However, many of these millennials live outside the formal credit system. A majority of commercial banks and non-bank financial institutions still refrain from short-term lending to this cohort due to their perceived risk. We realized that a large portion of the young generation Y earners are underserved or unserved by traditional lending institutions. Lack of financial data and credit history makes it difficult to assess risk and makes them sub-optimal borrowers for traditional lenders. The reason attributed to this was that this group of people lacks traditional credit data and, therefore, is effectively ignored by the financial industry. The low credit penetration and, in particular, the low level of unsecured credit is mainly due to the fact that Indian citizens are “low case” or “no record” clients from the perspective of these lenders. It is therefore the ideal place that we have chosen to serve.
What is the minimum and maximum size of the loan you are making?
Our loan products range from as low as Rs 5,000 to Rs 200,000 with a repayment term of up to one year. The platform receives more than 1,000 applications per day from young generation Y employees across India with an average loan request ranging from Rs 35,000 to Rs 40,000.
How to assess the eligibility and authenticity of a client?
Operating as an alternative loan app-based platform, we lend to our clients using our smart and intelligent digital app. The user logs in using their Facebook, LinkedIn or Google Plus accounts. The next step is to fill in the basic details of KYC. Once registered, eligibility is confirmed within minutes with the eligible loan amount. Eligibility is calculated using a sophisticated algorithm that taps into borrowers’ mobile and social network and requests basic documents to arrive at a Social Loan Quotient – SLQ score and a loan eligibility amount. Once the credit is approved; the requested amount is credited to the user’s bank account within minutes.
Past credit data to assess the creditworthiness of young professionals used by current banking and rating companies defies logic. CASHe uses modern technology combined with smart big data analytics and predictive algorithms to map young professionals across the country based on their mobile digital footprint and social behavior patterns to assess their creditworthiness. CASHe products are 100% app-based, user-friendly, instant and digital. The total loan process takes less than 10 minutes.
What are your financing plans?
So far we have raised $ 20 million in debt and we are looking to double our debt to $ 40 million. We are also looking to raise approximately $ 15 million in equity this fiscal year.