The Hindu Business Line : Apnaloan sees good biz in loan origination market

Apnaloan has tie-ups with sales employees/direct selling agents (DSAs) of various banks including State Bank of India, ICICI Bank and Standard Chartered Bank

Chennai April 6 Businesses, particularly banks, prefer direct contact with clients; brokers and middlemen are discouraged. However, Apnaloan.com Services Pvt Ltd, may change this relationship for better by becoming a preferred middleman to solicit business for banks.

In business since 2000, its Web site www.apnaloan.com has helped over three lakh people avail themselves of bank loans (personal, home, car) and credit cards without paying a commission or having to frequent banks.

The site simplifies the loan hunting process by identifying relevant loans suiting one's requirement. It also educates one on the fine print in loan documents besides responding to specific queries.

For banks, this means access to a pool of educated, active and contactable loan seekers. Apnaloan has tie-ups with sales employees/direct selling agents (DSAs) of various banks including State Bank of India, ICICI Bank and Standard Chartered Bank who access this pool and negotiate the loan to its conclusion.

For every such potential customer, Apnaloan is paid a referral fee by banks. Recently, about 70 entities have tied up with the company while 50 others have renewed their contracts.

Seeing the business opportunity, venture capital firm Sequoia Capital and Mr Harsh Vardhan Roongta, a chartered accountant formerly with ICICI Bank, invested to $2.2 million to buy out the company. Mr Roongta was in Chennai recently and spoke to Business Line about the business potential.

Loan origination

"We help in loan origination and this market (including insurance products) is estimated at about Rs 1,500 crore," he said.

Loan origination costs include banks' expenditure on advertising their loans and salaries paid to DSAs. For instance, the education loan segment is valued at about Rs 500 crore, of which origination costs contribute about Rs 2.5 crore. Car and personal loan segments (worth Rs 45,000 crore) involve origination costs of about Rs 450 crore. For health (Rs 2,000 crore) and auto insurance (Rs 3,000 crore) it is about Rs 250 crore, said Mr Roongta.

Expansion plans

The company plans to expand its services to include education loan, SME loans, loans against security of jewellery, shares or national savings certificates and risk-based insurance products such as health, term and auto insurance.

"We are also looking for tie-ups to finance niche loan requirements," he said. One such category is BPO employees with less than a year's work experience wanting personal loans of Rs 30,000-40,000.

Other categories include persons of Indian origin wanting home loans, NRIs and resident Indians wanting loans to buy plots.

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Apnaloan sees good biz in loan origination market