Loan seekers in AP, Telangana flocking to online lenders

Long queues, repeated visits to the bank and fear of being rejected while you are in dire need of money are the moment of the past. The rapidly flourishing fintech startups are not only supporting and adding further traction to the $3 trillion credit lending industry in India, but are also bringing in convenience, flexibility and faster credit to the doorsteps of the needy. Thanks to their efforts, loans are just an app away from many. 

As Telangana and Andhra Pradesh are clocking better economic growth and developing at faster pace, many businesses and ventures find the two Telugu states highly-fruitful markets. And, so do the fintech startups that facilitate loans and credit to the individuals and businesses alike.

So, it’s no surprise that for Bengaluru-based startups Qbera.com and MoneyTap, the Telugu states account for over 10 per cent in their overall business and more than 35 per cent in online traffic volume. Moreover, salaried people in the median age of 32 years and that of late 20’s and early 30’s are consumer and personal credit borrowers in the two states. Factors like home improvement, loan refinancing, wedding, and medical needs top the priority of the borrowers.

“10 per cent of total applicants seeking credit through the platform are from Telangana and Andhra Pradesh. From July 2017 to August 2018, the overall applications received on the platform were 25,719. Of them, loans taken for home improvement is 6,162 followed by loan refinancing (5,507) and wedding (3,063).  Besides loans for medical needs stood at 2,126 while we offered 1,741 loans for businesses and trade,” said Aditya Kumar, Founder & CEO, Qbera.com. Stating further on this, Kumar added: “Working professionals mostly look at credit options for travel, renovating their home, making a down-payment on their home loan, education of their children, marriage, and to invest in a business”. 

Another startup MoneyTap which launched a Telugu version of its app, has a large number of borrowers in Telugu states, who avail loans for medical emergencies, education and family functions.  Bala Parthasarathy, CEO and Co-Founder, said: “Within six months of the launch of our app in regional language, we witnessed an exponential growth in traffic. More and more salaried people are taking loans from our platform. Self-employed people also avail loans. But their number is less compared to the salaried class. People in their late 20s and early 30s constitute almost half our customers from the Telugu states”.

With growing demand for credit, new-age fintech starts are launching their platforms in regional languages. That’s helping them to penetrate deeper into markets. Even people from Tier 2 and 3 cities are also availing these loans. For instance, while Qbera.com attracts 74 per cent of its customers from big cities, the rest (26 per cent) is from tier 2 cities.  To attract more customers and offer financial assistance to every need, these digital platforms provides loan under different parameters and varied sizes. 

Loan amounts may range from Rs 25,000 to Rs 10 lakh. Besides, instant credit up to Rs 5 lakh is also being provided. While Qbera.com offers personal loan and credit card under a tie-up with RBL bank, MoneyTap has partnered with leading banks to offer personal credit line. However, Faircent.com, a peer-to-peer lending platform, brings a different perspective to this new-age lending concept. It connects a borrower directly with the lenders. 

Without the involvement of banks or other intermediaries, Faircent.com facilitates personal loans up to Rs 5 lakh and business-related funding up to Rs 10 lakh, with a repayment timeline ranging from six months to 36 months. 
With a fair presence in the market of AP and TS, Gurugram-based startup has five per cent of registered lenders and 10 per cent of its registered borrowers from the two states. 

And both the Telugu states accounted for nearly 11 per cent of the loans disbursed during FY18. The startup is also steadily witnessing rise in demand for loans from self-employed borrowers who are looking for funds to either start their own business or looking for funds to grow and expand their existing businesses. Business funding and working capital requirements account for over 35 per cent of the total loan disbursements on Faircent.com, expenses for family events and financing home improvement stand at 10.3 per cent and 7.6 per cent respectively. 

“So far, the ticket size of loans disbursed in these two states ranges from Rs 10,000 to Rs 3 lakh. However, the average ticket size of loans is Rs 1.25 lakh. Thus, given the impressive traction in Andhra Pradesh and Telangana, we are targeting a 3x increase in disbursements during FY 2018-19,” said Rajat Gandhi, Founder and CEO, Faircent.Faircent which has a plan to establish its offline sub-office in Hyderabad finds Secunderabad, Nizamabad, Vizag, Vijayawada, Guntur, and Krishna important for its growth as traction from these places is on the rise.

Thus, digital lending platforms with diverse business models are come to the rescue of those who are shunned by banks. As getting bank finance involves lengthier process and many people are not able to meet the eligibility conditions, people in need of funds are also preferring these digital platforms to address their immediate financial needs. It looks like a win-win situation for both – online lenders and borrowers.