The one problem that students deal with apart from the appalling educational expectation is financial dependence. Right from essentials like cell phones and laptops to passion-driven purchases like cameras, students generally do not have enough money to fund these by themselves.

In order to bridge the gap between aspirations and realisations, Cash Suvidha, trade name for Usha Financial Services Pvt. Ltd., a New Delhi based online fintech platform has partnered with Krazy Bee, a micro lending platform based out of Bengaluru to provide loans to students for fulfilling their basic needs such as laptops, mobile phones and other such electronic items.

Talking to Outlook Money, Rajesh Gupta, founder, Cash Suvidha said, “It’s a well-known fact India has an advantage of its demographic dividend; and we believe in the youth of this nation. We are keen to digitally empower this segment so that they can fully explore their potential and can excel in their passion through our financial aid. India has around 40 million students and the existing financial system is yet to adopt financial inclusion mechanism for students. Thereby, students segment has a potential which remains untapped.”

Currently, most of the existing micro-lending platforms enlist salary slips as compulsory eligibility criterion for the approval of a loan therefore making it difficult for students with no jobs to apply for one. Cash Suvidha has come up with a new procedure to help students borrow.

“All the applicants have to go through a customised merit based credit scoring model which revolves around the merit of the student in arriving at credit score. Students have thin file in CIBIL. We have adopted merit, social and behavioral aspects to assess the credit worthiness of students, and interestingly it’s all done through an app in real time. This has been especially created by Cash Suvidha and Krazy Bee. It’s absolutely simple, download Krazy Bee app, verify the applicant’s identity and upload required documents to register. Post registration and verification, student can place their respective orders. Once the order is placed the, the demand is referred to the campus verification. The verifying campus manager also clicks the pictures of the documents of the student and uploads everything on the app. So both sets of documents (uploaded directly by student and uploaded by campus manager) are matched and then the loan is approved,” added Gupta.

The most important factor that gets scrutinised before going forward with the loan is the interest rate. Bank loan rates roughly approximate to 15 per cent per annum.

“The rate of interest varies based on the city, college, campus, product and repayment behavior of the applicant. The rate of interest is dynamic in nature varying anywhere between 12 per cent to 36 per cent IRR (interest rate ratio). The average interest rate that goes in this segment is 24 per cent to 36 per cent annually depending on the product and time of purchase as some may have schemes or offers in it,” said Gupta.

Post this collaboration the fintech platform is expected to cater to a credit line of over 1000 students every month from over 100 colleges in all the metro cities and a few tier- II cities by the end of the current calendar year.

With the loan sector venturing into relatively newer avenues, the difference in loan rates and the ease of securing borrowings will be an interesting play-out.

rounak@outlookindia.com