Ex-Infy CFO Balakrishnan launches fintech firm
Aimed at making borrowing easy, billionloans will tap SMEs and individuals
Former Infosys board member V Balakrishnan (pictured) has founded a financial technology (fintech) firm named billionloans, which looks to make borrowing easy for small businesses and individuals.
The firm, founded jointly with Rangan Varadan of MicroGraam, will replicate the social impact organisation’s model to link commercial lenders with borrowers.
The focus is to build a 360-degree credit profile of borrowers based on their banking history and social graph so as to minimise risks for lenders.
“We have integrated a lot other technologies to ensure better user experience with less manual intervention by creating a 360-degree credit profile,” V Balakrishnan told
Business Standard in an interview. He has invested $1 million in the venture, which would raise funds from investors.
Balakrishnan, who also runs a venture capital firm that focuses on investing in start-ups which build technologies for enterprises, is looking to offer short-term loans and bill-discounting services to small businesses that are vendors to large companies. This would help the firm to start with a base before it expands its operations targeting individuals and small merchants.
India’s banking industry is undergoing disruption due to technology shifts. The government’s push for a less-cash society is forcing organisations and businesses to transfer funds digitally to their vendors and employees. It is also bringing millions of unbanked Indians into the formal system by opening bank accounts and using Aadhaar-enabled payment systems to bypass traditional methods of digital transactions such as cards.
This opens up opportunities for firms such as billionloans to tap a new base of borrowers. LendingKart, an Ahmedabad-based fintech firm in peer-to-peer lending, focuses on loans for small businesses, while Bengalurubased Capital Float provides working capital finance for small and mid-size businesses.
These platforms might ensure easy and low-cost loans for students, individuals planning to buy or build homes, and small retailers or businesses. They can potentially disrupt the model of large banks.
For small industries and individuals, borrowing from banks has become costly due to increasing non-performing assets of large banks. Based on the Reserve Bank of India data, the total non-performing assets or bad loans of both public sector and private banks stood at ~6 lakh crore as of June 2016. It also becomes difficult for individuals to borrow money from large banks, given their poor credit profile or the traditional method followed to check credit rating.
Billionloans aims to create credit profiles of borrowers through a three-fold background study — the details of cash flows on bank accounts, social media profiles and friend circles, and psychometric tests to check whether the borrowers have the intention of repaying loans.
“This comprehensive credit profiling will certainly give flexibility to both the borrowers and the lenders,” said Balakrishnan.
The firm will begin its operations in Karnataka, Tamil Nadu and Andhra Pradesh.
With a low risk-appetite and better credit profiling, billionloans will facilitate loans of up to ~20 lakh. The firm is planning to close the first round of funding of nearly $1 million from the external investor in the next two weeks and has applied for an NBFC licence.
“We are tying up with a few institutions on the lender side and hope they will come to our platform because of the quality of the credit profiling. We have created a website and a feet-onthe street to get access to the borrowers and also tying up with a lot of large companies,” Balakrishnan said.