SME Times News Bureau | 25 Dec, 2018
In an exclusive interview with SME Times, Manish Khera, Founder
and CEO of Happy Loans, a pioneer in providing digital micro loans to
individuals, said that banks and traditional NBFCs have barely attempted
to customize their loan products for microenterprises.
Unlike banks and large NBFCs, smaller NBFCs can test
innovative lending models and dynamically change their approach as needed. This
is where NBFCs have an edge over the big-pocketed PSBs, he added.
Manish Khera, the founder and CEO of Happy Loans, has been
an impact entrepreneur in the banking space for the past two decades. His
aspiration to make India digital and finance more inclusive has led to the
incorporation of ArthImpact Finserve (parent organization of Happy Loans), an
end-to-end digital lending platform for Indian microenterprises. Manish Khera
is an advocate of socially-relevant businesses that are also financially
viable. He has received much praise for his role as one of the thought leaders
in the financial inclusion and micro-finance space in India. He has been
honored and recognized as "Young Global Leader" by World Economic
Forum. Manish has also been recognized by E&Y as the "Entrepreneur of
the Year" and has been awarded the Forbes India Leadership award for
Excerpts of the interview …Please tell our readers about Happy Loans, about its brand name and entrepreneurial
Over 600 million people in India do not have access to
credit from mainstream banking institutions. We believe that one size doesn't
fit all and that is why we have created sachet loan products called 'Happy
Loans'. These loans can be availed for a period as short as 90 days and for an
amount as less as Rs. 2,000. The approach leverages alternate data sources and
has reduced the overall turnaround time down to 60 seconds – shortest anyone in
this segment has ever achieved. This innovation has been made possible with
Artificial Intelligence and Machine Learning algorithms that analyze over 1,000
variables in real time. They also capture behavioral data to assess a
borrower’s creditworthiness for future loans.
Please tell us about the services/packages you offer.
We cater to microenterprises falling within the income
bracket of Rs. 1 lakh to Rs. 5 lakh per annum. Happy Loans address two major
pain points of any MSME borrower, i.e. unavailable or limited credit history
and the overall turnaround time (TAT) of a loan. We do not rely on the
traditional credit score of a borrower. We record the transactional information
of POS machines and/or mobile wallet used by him or her. Apart from it, all
that a loan applicant needs is a PAN Card as well as Driving License or a Voter
Using this cutting-edge approach along with Artificial
Intelligence, we have effectively reduced the overall TAT to anywhere around 60
seconds to 5 minutes. This is while extending a more evolved and completely
seamless digital experience to our customers. We have additionally designed an
automation solution for our partners to exchange real-time data using our
proprietary API, which takes less than 7 days for our partners to implement.
There is reportedly a big ongoing tussle between Centre and RBI with
regards to MSME loans ... your views.
The recent rift between Centre and RBI involved
multidimensional factors that have both short-term and long-term implications.
It will not be fair to speak about some while leaving the others completely
unaddressed. Governance, whether it is of a company, a regulatory, or a nation,
is not an easy job. The RBI and the Centre might’ve had opposing views.
However, both of these views, when you look at them individually, are quite
lack of capital the only reason why banks reject loan applications, or there is
too much red tape, which is in fact a bigger problem as far as small loans are
Capital is not as big of a concern for banks. The challenge
for them lies in an outdated approach and red-tapism. Banks find it increasingly
hard to profile microenterprises with their limited or completely absent credit
history. As we have mentioned earlier, one size does not fit all. Information
of microenterprises is available albeit in different forms and needs to be
validated differently as well. Banks and traditional NBFCs have barely
attempted to customize their loan products for microenterprises. So, they need
to change their lenses and offer a solution that specifically suits MSME’s
needs through the available data set.
PSU banks, NBFCs too are concerned about risks before giving loans. But, why
then PSU banks lag far behind NBFCs in this regard?Please tell us about the small business credit scenario at present.
Indian PSBs are currently battling NPAs to the tune of Rs.
6.16 lakh crore. This considerably limits their risk-taking abilities and
thereby, they necessarily have to avoid any kind of adventurism. However,
lending via conventional approach, especially in the MSME segment, is very
inefficacious. The relatively smaller NBFCs can test innovative lending models
and dynamically change their approach as needed. This is where NBFCs have an
edge over the big-pocketed PSBs.
With fintech platforms and private banks in the game, the
credit market is undergoing through a massive transformation which will also
continue in the coming years. Credit will get commoditized eventually with the
infusion of technology, payments innovation, and data digitization. A lot is
likely to move even at the regulator's end. We need to just wait and watch how
the market develops.
your future plans?
We are ramping up operations to cater to a wide profile of
partners with varied businesses besides POS & BC network. We also plan to
customize our product for these varied micro businesses & their
requirements. We will be disbursing more than 7 lakh MSME loans by 2020.