Bengaluru-based consumer lending startup Avail Finance has signed a strategic partnership with ride-hailing unicorn Ola. As part of this, Avail Finance will build financial solutions for 1.5 Mn Ola driver partners and Ola will make a strategic investment in Avail Finance in its Series A round of funding.
With this, customised financial solutions for Ola driver partners will include micro-savings and micro-insurance products.
Founded in 2017 by Aggarwal and Tushar Mehndiratta, Avail Finance is an online lending platform that provides short term loans to the blue collar workforce in India, including gig workers such as cab drivers and delivery boys. The company offers loans only to people earning less than INR 35K.
Avail Finance allows personal loans of upto INR 40K for a maximum tenure of eight months at a fixed interest rate of 2% per month. The company also partners with companies such as Ola, Swiggy, Ecom Express, and Quess Corp, to offer salary advances to its employees.
The company has raised $26.4 Mn from investors such as Matrix Partners and other prominent angel investors. The company claims to have close to a million registered users through its various offerings and have processed requests of over $50 Mn.
Ankush Aggarwal, founder, Avail Finance said, “We are excited to join hands with Ola at this stage of our journey. We are energised about this partnership and the opportunity to serve Ola’s large base of driver-partners. This strategic partnership will further help us expand our offerings to a large, growing base of users with very unique needs.”
Bhavish Aggarwal and Ankit Bhati-led company has been expanding its horizons with focus on credit over the last few years. The company began with Ola Money postpaid option. Through the Ola Money Postpaid option, users can take multiple rides and club all the payments together for settlement in one go.
And for this, the company has claimed to see 30% M-o-M growth, and may soon take it to its 150 Mn user base. Ola Money Postpaid is made available to customers based on internal big data risk scoring algorithms.
It also recently launched Ola Money-SBI Credit Card to issue as many as 10 Mn credit cards by 2022. The company is allowing onboarding of new users for free for the credit card, and allows them to apply, view and manage their accounts directly on the Ola app. The cashback and rewards will be instantly credited to user’s accounts in the form of Ola Money.
Puneet Bhirani, COO, Ola said, “Avail’s innovative portfolio of new-age financial solutions are very relevant for Ola’s large and growing base of driver-partners. We are constantly looking at ways to enhance their quality of life and we see this partnership with Avail, helping our partners with access to financial offerings that are tailored to their needs.”
Digital lending is one of the fastest growing segments in the India’s fintech space. A BCG report has predicted the digital lending industry will touch $1 Tn mark in the next five years. Today, startups such as Avail Finance are focused on bringing digital lending to the underserved segment of blue collar employees.
24 Mn households in India who fall in the elite and affluent income categories have access to up to 80% of all formal loans, amounting to $202 Bn in credit, whereas the 124 Mn households with an annual income between INR 1.4 Lakh to 4.5 Lakh, have only received credit worth $24 Bn, which is less than 10% of the total formal market.
Being left out from the formal credit market, blue-collar employees often have to take the erratic and risky informal approach, such as unorganised moneylenders, their employers, and other quasi-legal avenues. With Ola opening up avenues for financing for its driver partners, the partnership may ace its expansion plans.