Giving credit is a murky business.
The demise of the futurist startup Finomena, which helped those with low CIBIL scores get loans and sourced loans of more than INR 20 crore for over 10,000 customers, left many thinking if there is any sense in lending outside the banking ecosystem.
Serial entrepreneur & investor V Raman Kumar saw an opportunity in this.
His latest startup CASHe is an application that uses data analytics and artificial intelligence to lend to young Indians in the age-group of about 21-35 who generally have no credit history.
Does he see the risk in it? Marginally. How is able to bear the risk? Kumar says due to his ‘cash-richness’.
“I can take this risk because I have extensive expertise that equips me,” Kumar told Entrepreneur in an exclusive chat.
Kumar believes for a cash-intensive business such his mobile-based alternate lending platform balance sheet needs to be bootstrapped with funds.
“When you talk about balance sheet in lending, you need to have a huge amount of financial resources, which initial needs to come from the entrepreneur as banks do not entertain such risky investments,” he added.
Talking about CASHe’s funding raising plans, Kumar says he has recently enchased an investment, therefore, claims to have deep pockets to fund such a venture.
Having businesses in countries like the US and UAE, when Entrepreneur India asked Kumar why did he choose India as his preferred market, he shared that, “There are about 32 million kids in the cohort that I am addressing to. I cannot get such a large chunk of customers in any other geography. So, if you ask me why India – it is just the size of the market. We should be where the market is.”
The mobile application uses social media and smartphone data along with RBI mandatory documents like the Aadhaar card and the pan card of the customers. Once the registration process gets completed, the application takes roughly 8 minutes to transfer the loan amount to the users’ bank account.
Users can avail loans ranging from INR 5000 to INR 1 lakh, which can be repaid over a period of 120 days.
The application, which was launched in April 2016 and has about 7,50,000 downloads with 75 per cent repeat users, has disbursed about INR 220 crores till date.
The company raised about INR 20 crore debt from IFMR Capital and INR 25 crore in series-A funding ex-Blackstone PE ‘s Head Mathew Cyriac among other investors.