After having faced a lot of obstacles and challenges in the past couple of years, the NBFC business has good prospects in the coming year on rising demand despite facing a higher interest rate regime, says Credit Fair CEO Aditya Damani, in interaction with Rashi Aditi Ghosh of Elets News Network (ENN).
Credit Fair has entered the fifth year of operations. How has been the journey so far?
The journey has been exciting and challenging. Every day is getting more exciting due to rising digital adoption but also challenging as we are in a higher interest rate regime, globally. The domestic inflation is moving in tandem with the global scenario.
But we are glad to say that, compared to the mainstream lenders, we have helped tens of thousands of people move up the credit ladder since we are inclusive in our underwriting and accept new-to-credit borrowers or customers from the lower income groups.
We have also contributed to creating a vast pool of skilled human resources and built social infrastructure by financing upskilling, healthcare, home renovation, and green energy projects.
In the MSME sector too, our initiatives helped thousands of merchants and small units grow their businesses by over 20 per cent per annum om average due to our inclusive
underwriting and best-in-class turnaround time for loan disbursements. Moreover, we have helped over 500+ customers climb the wealth ladder last year by offering alternative debt products that offer two times returns compared to fiXed deposits, at minimal risk. Needless to say, we have achieved all this in a compliant manner, being regulated by the Reserve Bank of India, from day one.
What’s your vision for creating a fair and inclusive financial world for everyone in this country?
We want to ensure that every Indian has access to the ‘right amount of credit’ at the ‘right cost’ and ‘right time’. By 2025, we want to help at least one million people move up the credit ladder. Our objective is to facilitate inclusive lending by helping prime, new-to-credit as well as near prime applicants gets access to purpose driven loans.
Do you discern any chance of a shift in the RBI’s credit policy in the next MPC meeting?
Looking forward, the RBI may hike for another 1-2 meetings and then pause this policy rate hike cycle as retail inflation has come down to an 11-month low of 5.88 per cent in October, which is within the central bank’s tolerance limit of 4-6 per cent. It is a big relief and a sign that the government as well as RBI’s efforts are bearing fruit. Next time, when the MPC meets, there may be a shift of stance. Because it will take some time for transmission; the effects of earlier rate hikes to reach the ground level.
Youth is an important business segment in the country. What do you offer to attract the Millennials and Gen Z?
Most of our loans are specifically targeted to the Millennials and Gen Z such as ‘No Cost EMIs’ for upskilling courses. We are also financing for ‘Income Share Agreement’ courses; that is, they have to repay the loan only after getting placed in a company. These features help students search for a job without any worry about loan repayment and start their careers on a strong footing. The finance cost is negligible in this case due to our ‘No Cost EMI’ product. We are also enbgaging youth to better manage their finance by enabling access to the alternative fixed-income products which were earlier reserved for the affluent class. Through this, we are helping them climb up the wealth ladder.
What are the challenges that come up in the process of financial inclusion in India?
Financial inclusion is a prerequisite for credit expansion. The biggest challenge is the lack of data on the underserved population such as gig workers, agricultural labourers, and
MSMEs since a lot of business transactions still revolve around cash. When the payments and transactions get more digitised, the financial initiatives will also gain more steam. The response the UPI-based real-time transactions evoke at the ground level is very positive. The situation is fast evolving and we are in the right direction.
Also Read | Much more needs to be done to unlock the full potential of the MSME segment
How was 2022 for you? What did you learn from the experiences of the current year?
This year was very promising. We have witnessed many landmark shifts in 2022. Since we came out of the pandemic in 2021 itslef, we were able to accelerate in 2022. We grew our customer base by 4X thanks to the support from the early-stage funds like Nueva Capital and debt funding from India’s largest lender SBI. As we look to scale faster, the key learning for us is that it is never too early to invest in strengthening our core team.
What are your plans for 2023?
We have the task cut out for the next year. We have plans to help over 1 lakh people improve their financial position in 2023, achieve Rs 200-crore run rate for disbursements, and grow our revenues 4X while boosting our profitability.
The overall economic condition is congenial for this. As inbflation softens, consumers and business spending will gorw and provide us opportunities to enable this growth. RBI’s new regulations around digital lending will provide a boost to regulate fintechs like CreditFair. We plan to gain more marketr share and play our part in making India the most financially inclusive country globally.
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