BillionLoans Financial Services has closed a seed funding round of ₹7 crore ($1 million) from Reliance Corporate Advisory Services, a wholly-owned subsidiary of Reliance Capital.

The deal was led and structured by Reliance Wealth Management.

Billionloans connects borrowers to lenders directly by using technology and alternative data-backed credit analysis to assess eligibility and process applications.

“This means that borrowers get access to fair rates, and lenders get access to good quality, credit-assessed borrowers helping them diversify their loan portfolio,” said Rangan Varadan, founder, who has also co-founded MicroGraam, an online micro-lending platform.

The start-up is also backed by former board member and Infosys CFO, V Balakrishnan, whose company Exfinity Venture Fund was an early investor in BillionLoans.

Billionloans will initially focus on SME (small and medium enterprises), affordable housing, education and personal loans. With this round of funding, the company, which is largely present in South India, will look at other parts of the country, spend on branding and hire marketing personnel, said Balakrishnan.

To facilitate loans, the company has tie-ups with financial institutions and banks to its technology platform. According to Anmol Ambani, Executive Director, Reliance Capital, technology and innovation in financial services are going to play a big part in bridging the gap between aspirations of large number of Indians wanting access to credit on one hand and the ability of companies to build efficient and scalable lending models on the other.

In the next three years, BillionLoans plans to facilitate around ₹2,000 crore of loans across multiple products and lenders.

Significant demand A large part of the optimism stems from the fact that there continues to be significant demand for lending to micro, small and medium businesses in India where traditional lenders such as banks shied away. This, coupled with large amounts of corporate debts that the banks have been saddled with, is being seen as opportunities for start-ups.

“Technology can fundamentally disrupt this process of discovering borrowers as well as their ability to pay back loans quickly,” said Balakrishnan. As an example he cited ways like access to bank accounts through Aadhaar, which would give a lender visibility into the cash flow, spending data and psychometric tests to make informed lending decisions.

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