Ravi Narwal (20), of Delhi, is preparing to become a Charted Accountant. At the same time, he wants to build a physique like Bollywood star Ranveer Singh. In order to manage time and keep track of his activities, he feels, having a hi-end smartphone is essential. However, he cannot afford one, as of now.
Like Narwal, many have an assured career, definite collateral, but lack capital for an important or immediate purchase.
Loan from banks for small products like mobile phones or two-wheelers, is a cumbersome process. Add to that, the complicated paperwork. Here comes Clix Capital to the rescue.
“Most lenders tend to be risk-averse. It requires a complete mindset change. Our team uses advanced algorithms to assess their ability to repay and do not depend on surety,” said Bhavesh Gupta, CEO, Clix Capital.
Get set for paperless loan in less than two minutes. Gupta confirmed, “It is possible to offer capital after evaluating the loan applications in newer innovative ways.”
Clix Capital is a non-banking finance corporation (NBFC) headquartered in Gurugram, Haryana. It was set up in 2017, after AION Capital acquired the commercial lending and leasing business of GE Capital, which was renamed as Clix Capital.
Gupta’s aim is to offer easy capital access to individuals like Narwal.
However, the growing online lending segment in India is giving rise to a new kind of challenge in terms of sourcing credit score data. To solve this problem and bring new customers into credit footprint, companies are using technological innovations to create alternate lending data score for more than 80 per cent of Indian population, who do not have any credit history.
They are tapping basic informations of consumers such as their social media presence, number of visit to their favourite restaurants, in order to collate their alternate lending data score.
The company successfully worked with Airtel to hawk iPhones and latest Nokia models. “Imagine getting an instant credit to purchase your dream device, and a great plan to go with it, all available in one place with a few clicks,” Harmeen Mehta, Global CIO and Director – Engineering, Bharti Airtel mentioned in a statement.
Clix Capital is also in advanced stage of discussions with Hero Group for motorcycle loans. It aims to set a benchmark by offering loans to customers using their profile. “Approval within less than five minutes is what we wish to achieve,” said Gupta.
Other NBFCs like inCred, Home Credit, Bajaj Finserv, Capital First and Tata Capital are also working on similar technologies.
Personal loans accounted for 96 per cent of new bank loans during the Financial Year 2018, according to Reserve Bank of India (RBI) data. Personal loans increased by 19.1 per cent in April 2018 as compared to an increase of 14.4 per cent in April 2017, RBI further stated.
NBFC’s are working on survival-analysis in credit-risk modeling. “Algorithms allow us to profile the individual’s ability and intent to repay. There are a number of diagnostic methods to check the individual’s data and suitability with the loan,” said Gupta.
According to Bankbazar.com, to meet the personal loan eligibility criteria, you will first need to be at least 21-years-old and not more than 65 years. This age limit can vary from bank to bank. Your CIBIL score will also be checked to assess your eligibility. Preferably, it should be 750 or above. Your lender will also fix a minimum and maximum loan amount as per your repayment capacity and income.
According to a CIBIL report, there are 220 million (22 crore) credit-eligible consumers in India within an age-group of 20 – 60 years and with an income of over Rs2.5 lakh per annum. However, till now only 72 million credit-eligible customers have been tapped by the banks and other lending institutions. These consumers are either “credit active” or have a live account with a bank or lending body.
The remaining 150 million (15 crore) are those who either have the lending criteria from the age and income perspective or may have availed some credit facility in the past but are currently dormant.
This untapped market also provides an opportunity to lenders like Clix for sustained and prudent growth over the next five years and hence, excites them to identify new ways to reach this untapped market.
According to an internal study by Clix, the addressable market will reach to 295 million by 2022 and will increase at a rate of 14–16 million (1.4 -1.6 crore) consumers per year.
Clix Capital has entered into a partnership with electronics brand Micromax for an in-store mobile financing programme. As a part of this partnership, customers can take home a smartphone by getting a device loan within two to three minutes by using this app. This offer is valid on Micromax smartphones worth `8,000 and enables customers to get a phone with a down payment of just Rupee One.
Gupta claimed that the app enables a smooth customer experience by completing the entire application process faster than cooking instant noodles. Customers only need to carry an ID proof (Aadhaar or PAN card), address proof (Aadhaar, Passport or Driving Licence) and a cancelled cheque for bank account details.
The firm is focusing on building technology to automate the lending process, including evaluation of applications using automated risk scorecards for underwriting credit risks so as to provide instant loans to customers including those like Narwal with no or thin credit history.
rajendran@outlookindia.com