NeoGrowth–Digitising the MSME Lending Space

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Piyush Khaitan, Managing Director and Co-founder, NeoGrowth
Piyush Khaitan, Managing Director and Co-founder, NeoGrowth

NeoGrowth is a for profit organisation; however, highly focused on the betterment of the society by contributing to the large MSME sector, making people more self-sufficient. It has been driving digitalisation in the Micro, Small and Medium Enterprises (MSMEs) lending space by pioneering the concept of Point of Sale (PoS) based funding, says Piyush Khaitan, Managing Director and Co-founder, NeoGrowth, in conversation with Harshal Yashwant Desai of Elets News Network.

Please brief us on your organisation’s performance since its inception. What has been at the core of NeoGrowth Credit Pvt Ltd?

At NeoGrowth, we have been driving digitalisation in the Micro, Small and Medium Enterprises (MSMEs) lending space by pioneering the concept of Point of Sale (PoS) based funding. Our business model operates at the convergence of three ecosystems – lending, urban retail and digital payments, on a platform of technology and in from the very beginning, we have built profound expertise in each of the three domains and brought them together into our model. It is also extremely important for us that the loans we give have a positive and a strong social impact.While working closely with retailers, we realised their problems in terms of accessing finance. More than 50 percent of these retailers with adequate credit-worthiness were denied finance based on the traditional underwriting methods. We intend to fill this gap at NeoGrowth. With a perfect mix of tech and touch, we provide quick loan disbursal ensuring uninterrupted operation of the business for our clients. We focus heavily on customer delight initiatives resulting into a healthy renewal rate of around 70 percent.

According to you, traditional underwriting methods in India exclude more than 50 percent of creditworthy Small and Medium-sized Enterprises (SMEs). Will you please elaborate?

The traditional underwriting methods followed by banks and other financial institutions involve submission of extensive documentation by the customer including financial statements for the business, Credit Bureau scores, documents for the property to be kept as collateral and many more, followed by scrutiny of the same. Most of the MSMEs in India are unorganised and do not have structured accounting system in place to generate the appropriate financial statements for their businesses. It may be due to lack of knowledge about the same and unavailability of funds to recruit professional staff. These factors keep SMEs deprived from credit access despite of being creditworthy basis their business model, its existence and revenue generation. At NeoGrowth, we provide short-term unsecured business loans to our customers on the basis of digital transactions at their outlet, with minimum documentation.

Also, please brief us on the kind of business loans offered by you?

NeoGrowth offers short-term unsecured business loans to the MSMEs based on PoS machine transactions at their retail outlets. NeoGrowth also offers Vendor finance to the suppliers of large corporates on the basis of monthly receipts. These loans are offered for a period of 18 to 36 months depending on the business segment and up to an amount of Rs 50 lakhs.

How have you been able to make the most of advanced information technologies within your organisation?
NeoGrowth has developed a robust lending platform using technology, automation and analytics. With its unique tech & touch model supported by the in-house technology platform and smart analytics of the digital spends data enables NeoGrowth to offer lending products best suited to the needs of the SME products and services in the market. We have API integrations with our Partners which leads to seamless lead sharing and reduces the TAT for loan processing. At the same time, our Sales team is equipped with a Sales App, which enables us to on-board customers on-the-go in the field.
NeoGrowth leverages its strong technology backbone for underwriting and monitoring. Our automated underwriting uses data to create business rules and uses an innovative credit risk scoring mechanism.

How partnership with 13,000+ business merchants is helping you to grow? What are your expansion plans in near future? Please educate our readers on your tech-enabled processes and smart analytics?
The lending to SME sector is certainly booming and so is our thirst to grow. NeoGrowth has so far disbursed loans to 13,000+ business merchants in the MSME sector which has contributed to over Rs 1,000 crore of our Assets Under Management (AUM) today. Pioneering the concept of Digital Lending in India, we are continuing to operate as per our strategy of going Deeper, Wider and Newer. Today, we have offices in top 21 cities of the country, where we visualise a remarkable growth in acceptance of Digital payments. We will continue with our expansion plans into these markets and keep improvising to come up with better solutions to help the SME segment in best possible manner. In the next 5 years we aim to cross Rs 7,000 Cr in AUM; in other words, build a billion-dollar balance sheet.

What are your views on the current market situations for NBFCs in the country? Which are the elements that might be affecting the Non-Banking Financial Companies (NBFCs) business currently?
NBFCs are the alternate source for consumer as well as business funding and will always remain a backbone for the Indian lending sector due to the benefits of quicker loan processing and deeper penetration in the unbanked regions resulting into efficient financial inclusion. The NBFC domain has faced issues in the present considering the recent liquidity crisis. However, such ups & downs will continue to prevail in any industry and I am sure the markets will smoothen soon. Compliance is highly essential for any financial institution and should be adhered to with zero errors, to ensure avoidance of any such incidence.

How about the products and services offered by your organisation? How these products are different from other solutions available in the market?
NeoGrowth offers short-term unsecured business loans to the MSME sector across multiple business verticals. Our loan product differs from the traditional NBFCs and Banks due to its unique underwriting method of deciding eligibility based on POS machine transactions at our customer’s retail outlet. We provide loans to retailers, wholesalers, professionals through our direct channel. We also provide vendor finance which is offered to suppliers of large corporates based on payment receipts. The technology integration in our loan offering is the key differentiating factor for our product which makes it easily accessible, quick in processing and flexible in repayment.

Will you like to share any other information with our readers?
NeoGrowth is a for profit organisation; however, highly focused on the betterment of the society by contributing to the large MSME sector, making people more self-sufficient. We offer business loans with an objective to support job creation, motivating first generation entrepreneurs, women empowerment, enhancing credit rating of our merchants and eventually contributing to the growth of Indian economy as a whole. To read NeoGrowth’s Social Impact Report for 2018, please visit : https://drive.google.com/file/d/1xGka3OQ982LiHSoCE9ccyl0tInMPkt9U/view

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