In an exclusive interview with SME Times, Gaurav Gupta, Co-Founder and CEO, Myloancare.in, said that India is currently undergoing a major fintech revolution.

Excerpts of the interview …

Please tell our readers about MyLoanCare and its entrepreneurial journey.

When we ventured into the fintech space with our solution in 2013, we started with an objective of changing the way borrowers take a loan in India making the process quick, convenient and transparent. Back then, the online lending market was just evolving, here was relatively low acceptance and readiness for digital transactions both on the demand side from customers and on the supply side from conventional lenders.  We initiated with home loans, added personal loans in 2015 and gradually expanded to other categories including gold loan, loan against property, car loans, business loans and credit cards which have shown strong traction. We are the pioneer in initiating online gold loan sourcing in India, a concept which was virtually unexplored before MyLoanCare started offering a comparison of Gold Loan products of leading banks and NBFCs on its website. 

After working persistently in this sector for nearly six years now, we have managed to be amongst the leading online loans marketplace in the country and the first to achieve profitability at net level in FY17-18.  Our platform has recently crossed the milestone of INR 2000 crore of loan disbursement across India since inception with more than 20,000 borrowers and 2.3 million registered users on the platform.

What are the services you offer?

Our platform is a digital financial intermediary that enables the customers to make an informed choice by comparing, shortlisting and finalizing the right loans in the most hassle-free manner. With a strong focus on innovation and technology, MyLoanCare makes the process of taking credit easily through an algorithm-based matching of the customer’s credit profile, thereby showing them only 2-3 suitable bank offers as per their needs and eligibility. Furthermore, customers can compare the rates, terms, and conditions of all its 24+ partner banks together to zero in on the best deal with the lowest EMI burden. This efficient service of shortlisting loans and advising customers is offered at no extra fees from the borrowers. Further, technological integration with banks enables customers to check the real-time status of their loan application without any errors.

Our latest loan portfolio management system launched on the back of our “Double check your financial fitness” program has made the system of match making and shortlisting banks even more targeted. It includes a set of 25-30 parameters such as customer profile, income, age, past credit history, and geography to identify the best loan product and customized interest saving offers for our customers. Going forward, we plan to share the results of our tool with our customers to enable them to make wise financial decisions.

In addition to the digital capabilities, our platform also allocates a loan advisor to each customer who coordinates with the bank on the customer’s behalf and guides them through each step of the loan-availing process. Additionally, all the key terms and conditions along with the interest rates are kept transparent for the customer. It is the combination of systematic assessment of users’ financial needs, a knowledge base of industry insights, and technological expertise that has enabled MyLoanCare to change the way people take loans in India.

Please give our readers an idea on current business loan scenario in India.

It is quite evident that India is currently undergoing a major fintech revolution unravelling an array of innovative digital lending solutions for the financial empowerment of small and medium businesses in India. Driven by a tech-led approach, the players in this segment are leveraging data analytics and proprietary underwriting algorithms to assess vast volumes of conventional as well as non-conventional data points related to prospective borrowers. This enables the new-age fintech platforms to create more accurate profiles for the borrowers, thereby granting them access to credit and other such financing opportunities even in the absence of financial records or previous credit history. Because of this approach, fintech has been playing a highly impactful and transformational role in the way the unbanked and underserved segments are treated in the country, unlocking several possibilities for their financial empowerment.

Digital lending platforms are also making the entire loan process for businesses as streamlined and optimized as possible. New-age technological tools and algorithms have shortened the otherwise tedious underwriting process, allowing loans to be disbursed in as little time as within 24 hours after the application while requiring minimal documentation. Furthermore, these fintech players are creating unique loan products tailor-made to suit the varying requirements of every business. Be it a one-time financial need for business expansion and incremental purchases, overdraft facility or line of credit for meeting seasonal demands and ensuring cash inflow, or even availing credit for unpaid bills through invoice discounting—new and existing businesses are now leveraging digital lending platforms to meet most of their monetary needs.

Are India SMEs getting enough credit from banks?

Procuring loans from traditional banks remains a prerogative for the organized SME sector as banks lack the under-writing skills to assess the risk associated with SMEs due to under-reporting of profits, lack of proper financial statements and documents. Banks credit appraisal process is still based on an analysis of financial statements of the borrowers which makes the process lengthy, costly, uncertain and non-transparent for the borrowers. Borrowing funds become tough for small businesses when they are unable to demonstrate their business potential by way of business plans, transparent financial reports and strong financial structure. A part of this challenge has been overcome by the growing formalization of the Indian economy in the wake of GST and demonetization, and the government’s thrust on digitalization which has paved the way of quick and easy loans from digital lenders. While bulk of lending by SMEs is done through NBFCs and incumbent banks, digital lenders are coming up with innovative ideas to meet the small ticket size loan requirements of micro and small enterprises in India. Many of the new lenders have managed to bring the turnaround time for SMEs loans to a 4-7 days, compared to turnaround time of up to a month by traditional banks.

What about the interest rate in comparison with global SME peers?

The cautious approach of banks towards lending to SMEs in India has not only restricted flow of finance to the sector but has also resulted in high interest rates for the segment. Rate of interest on SME debt is significantly higher in the country compared to many other developed nations. Many of the fintech lenders operating in the space, are also charging high rates in the range of 16-22%. We expect the interest rates to come down in the long run as finance penetration in the sector increases, more lenders enter the market and as lenders build rich credit portfolio data, which allows them to price the loans in line with the actual performance of the SME portfolio.

Where banks are lacking while NBFCs are outperforming them, according to you.

NBFCs, especially fintech lenders compete and outperform the banks with their flexible approach to evaluating risk by including parameters that are not considered by traditional banks as well as reducing the documentation requirement for the borrowers. Further, app-based loan offerings which include eKYC, digital document upload facility, digital score-based models using alternate data and real time status update for the borrowers.  NBFCs have also introduced a series of innovative products such as credit line, OD facilities, POS transactions-based financing customized to meet the fluctuating cash flow requirements of a typical SME.

Please tell our readers about your future plan.

As of now, we are eyeing on more opportunities in personal finance and distribution space. Besides this, we are also working towards devising more innovative products like a credit line, app-based easy personal loans, digital credit cards, and planning to introduce more financial services to our portfolio such as investments, mutual funds, tax-planning, etc.