Money & Banking

Fintech CredRight expands to provide loans for SMEs

M Somasekhar Hyderabad | Updated on February 07, 2019 Published on February 07, 2019

By tapping the huge database and strength of the chit fund sector, Hyderabad-based CredRight is expanding rapidly in extending loans to the small and medium enterprises.

Claimed to be one of the first fintech start-up’s focused on chit fund sector, CredRight raised ₹9 crore from Accion Venture Lab, a seed-stage investor and YourNest, an early stage venture capital fund and a few angel investors in mid-2018.

Neeraj Bansal, co-founder and CEO, said that CredRight is a data-driven lending platform. “We are partnering with chit funds and use a reverse auction to distribute pooled funds — across India to acquire customers and to underwrite a loan for a customer.”

The Indian chit fund business is estimated to be around ₹70,000 cr with about 75-80 lakh customers.

The 2016 incorporated company has firmed up plans to further invest in technology. It plans to grow from the strength of 13 to 35 and lend ₹50 cr by December 2019, Bansal said.

Bridging the gap

The partnership with chit funds gives us access to SMEs and their entire past credit history related to payments and defaults. With millions of MSMEs unable to access lenders in the formal sector, CredRight can bridge the gap, Bansal said.

“We use three broad criteria to base our lending assessment. The KYC of customers, the ability to pay and willingness to repay,” he said.

The company is looking to provide loans of above ₹5 lakh to retailers/small businesses like chicken or barber shops and above ₹10 lakh to SMEs. “In the last year, the loan band ranged from ₹1 lakh to maximum of ₹35 lakh with an average of ₹9.5 lakh,” he added.

With a few players in the segment, Bansal hopes to tap into the huge unmet demand for credit/loans in the MSME segment while addressing the problem of getting them and making the procedure simpler.

Published on February 07, 2019
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