Banks and other financial institution hesitate to provide secured loan in case of no or low credit score, least of all unsecured loan. Qbera, an online lending start-up fill such gaps in lending. Aditya Kumar, Founder and CEO of Qbera, explains how the company works. Excerpts:

Can you explain about Qbera’s operations? How is it different from a bank or NBFC personal loan segment?

The name ‘Qbera’ comes from ‘Kubera’, meaning Lord of money. Qbera offers unsecured loans to salaried individuals, collateral-free. Anyone earning a minimum of ₹20,000 net each month is eligible for loans ranging from ₹50,000 to a maximum of ₹7.5 lakh.

Banks and NBFCs also offer similar type of services, but their coverage is limited to a maximum of 50,000-60,000 companies; Qbera has a database of 7 lakh companies. Also, they offer loans to employees who hold very good credit score, have high income and work with the top companies. It doesn’t mean that other individuals are unlikely to get a loan; the amount would either be lower or interest charged is high or both. Qbera offers loan to customers with no or low credit score — that is, with a credit score as low as 600 and above.

Banks’ average personal loan size is ₹5 lakh — an individual earning ₹20,000 per month cannot afford to borrow such an amount. Qbera’s ideal client is one earning ₹20,000-50,000 net every month, working in one of the seven lakh companies and with low or no credit score. Therefore, we are able to lend to a significantly large section of salaried individuals.

In three-and-a-half months, we have lent ₹4 crore. Our loans are funded by our banking partner RBL Bank, The EMI could be as low as ₹2,700 per month per lakh for four years. The whole process, including disbursement of loan, gets completed within 24 hours.

Qbera lends to the 23-57 age group. Fresh graduates tend to change jobs or move places. Also, what if people lose their job? How would you mitigate the risks?

There are serious repercussions for defaulting on loan repayment. First, this is reported to CIBIL by RBL Bank. It gets noted on the individual’s credit report and the score comes down. This will affect the chances of getting a credit card or car loan or home loan. With salaried individuals, the intention is to pay. Even if they move jobs or relocate, as long as there is income, the payment would be made automatically. Historically, the salaried segment is a safer bet when it comes to lending in the country. This is because they don’t want to risk messing with their credit score.

The bank can also initiate legal or criminal proceedings when the customer continuously defaults. One really doesn’t have an option but to pay.

But individuals can still get secured loans despite defaulting on unsecured loan payment…

Yes. But the chances of getting a secured loan comes down. For instance, if your CIBIL score stands at 600, you may not even get a secured loan. Defaulting on unsecured loan will significantly impact the ability to borrow in the future.

Can a loan be taken for any purpose? Is there any restriction on that?

We do ask customers to declare the purpose for taking the loan. It is offered for almost everything except speculative purposes. Typically, they borrow for exigencies such as sickness, travel, marriage, purchase/renovation of home or when their credit card limit has been reached.

Who are your competitors?

While players such as Bank Bazaar suggest leads for banks, we identify the customer, do a risk assessment and offer a loan jointly with a bank.

Usually people either provide leads or offer some analytics services. So companies like Qbera, which do the core banking service of lending, are very few.

What are the future plans of Qbera?

In future, we want to lend to self-employed professionals and sole traders. Now, we lend only to salaried individuals. Our focus now is on Bengaluru, Chennai, Delhi and Mumbai since most salaried individuals are based in these big metros.

We would like to add Hyderabad, Pune, Indore, Jaipur and Ahmedabad to the list.

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