SME Times News Bureau | 04 Jun, 2019
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
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
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
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.