13th Aug 2019Mumbai-based fintech startup MudraCircle is using a tech-enabled alternative scoring model to provide credit access to small businesses that are normally not given loans by either banks or NBFCs. (By Thimmaya Poojary)
Credit is the lifeline of any business or economy, and more often than not, a vast majority of people are seemingly unqualified to receive this money. In an attempt to help small business owners or individual businesses avail credit, MudraCircle was started by Vaibhav Mishra, Anand Mishra, and Amit Kumar in 2018 in Mumbai. Vaibhav says, Studies have shown that 92 percent of SMEs or self-employed business are unfunded in India. This means they generally cannot avail credit either from a bank or NBFC.
MudraCircle is looking to change this through a combination of technology, banking experience, and an understanding of business dynamics. This fintech startup brings together borrowers and lenders onto a single platform. Over the last one year, it claims to have enabled the disbursal of around Rs 10 crore of loans.
Vaibhav has been into banking for nearly two decades now, while Anand and Amit are technologists. With his experience in different functions in the banking sector, Vaibhav says he came across many people who just could not avail of credit as the parameters set by the bank did not fit their profile. This was also compounded by the fact that banks or NBFCs were regulated bodies so they could not create any alternative lending models. Vaibhav says, There was this large pool of people, which was unfunded though there was cash in the system and there was a lot of digital activity happening.
This gave the founders a sense of opportunity, which led them to start their bootstrapped venture. We decided to integrate all this data with the digital process and create an alternative scoring model, which is robust as well as flexible, he adds.
This is a team of 4 Co-founders which has banking/ finance, Technology and Data-science expertise between them. MudraCircle is all set for a big bang commercial launch in January 2018.
Vaibhav told us that India has over 50mn+ registered enterprises of which about 92% do not have access to adequate credit. The total MSME funding gap across the sector is about INR3Tn. Unit economics (in branch and spoke model) does not favor traditional institution penetration in this segment. Lack of distributor/ trade credit facilities further widens the demand for our services. One of the other main reasons is absence of reliable credit methodology to assess these unfunded or underfunded customers. We feel getting finance should be quick and easy, so that the enterpreneur can get back to doing what he/ she do best- running their businesses. Whole system cuts out the complexity and hassle of borrowing.
If enterprenur has gone wrong somewhere with his/ her credit score we help them in identifying the problem and suggest ways to improve the same. With our understanding we also help borrowers to improve credit score by way of financial/ credit literacy education. This credit consultancy will be free for its borrowers.
MudraCircle aims to connect with existing DSAs in the country for getting borrowers on board as a separate acquisition channel apart from Digital marketing leads. Partners would have their own dashboards from which they can upload borrower files. For existing DSAs, complete digital process would result in better productivity & earnings. At Mudra Circle, we're open to partner with a broad range of businesses, corporates, institutions, from brokers to advisors and affiliates to retailers and banks to NBFCs. People whom we work with should share our goal of delivering fast & best-in-class customer experience in financial services by making money simple and fair.
Ashish said, MudraCircle just doesnít stop here and it has further made even the disbursement process & repayment completely digital. MudraCircle will just not acquire the customer but also aims to to do underwriting with itís automated traditional underwriting model alongwith assessing the borrower with alternate data based underwriting.
Ongoing & almost real-time digital footprint collection/ analysis keeps tracking the borrower and gives early warning signals to both Bank/ NBFC and borrower. Basis signals Bank/ NBFC can get in touch with the stressed borrowers to ensure they remain financially disciplined.
MudraCircle just not acquires a customer for the Bank/ NBFC but it keeps digitally tracking the borrower till the time last loan EMI is paid. Goal is to ensure low delinquencies. By ensuring borrowers get money at moderate rates, and investors/ lenders with attractive, risk-adjusted returns; Mudra Circle aims to earn highest satisfaction ratings in the financial services industry.
Anand further adds that MudraCircle combines the best in class technology experience with credit underwriting & data analytics capabilities to create a brand new investment asset class. Borrower can register in less than a minute and complete whole application later in maximum 20 minutes. MudraCircle will present the most scientific and reliable credit assessment of borrowers to lenders which otherwise remain un-served or under-served as majority of these borrowers donít fit into assessment methodology of traditional credit underwriting.
MudraCircle offers seamless integration with Banks/ NBFCs and they can create & send customised loan solutions for borrowers. MudraCircle also plans to launch application form filling through Voice soon. Whats also part of the plan is scores based on Mobile data, voice recognition, facial expressions and eye movements.