FinTech Startup OptaCredit Secures $4 Mn Credit Line From DMI Finance

OptaCredit, the alternative-lending fintech startup, announced that it has secured an initial $4 Mn credit line from DMI Finance. The credit facility will be directly imbibed in aiding the company’s present financial offerings in aiding salaried customers across India to get access to timely and transformational credit.

The Chennai-based fintech startup was founded by S.Kumar Srivatsan, S.Kumar Srikanthan and Sriram Chandramouli.

The company which was founded by makes use of a hybrid approach wherein as part of its core strategy to scale, it retains a certain percentage of the loan assets generated via its platform on its balance sheet as it has a lending license. Kumar stated that this was done to show the conviction to investors about how OptaCredit was investing into the idea. Apparently, the plan has come to fruition.

Speaking about the acquired credit line, S Kumar Srivatsan, founder and CEO of OptaCredit said, “DMI’s credit line is another indication of the comfort that financial institutions have on our underwriting processes and credit practices.”

“This strategic alliance with OptaCredit is in keeping with DMI’s objective of being a flexible, innovative and impactful lender in the area of personal loans. The DMI’s technology-driven underwriting and the strong balance sheet is a natural partner for OptaCredit,” stated a member of DMI’s senior management. Headquartered in Delhi, the DMI group of companies was founded in 2008 by former Citigroup Inc. executives Shivashish Chatterjee and Yuvraj Singh.

The growing aspirations of the new-to-credit and underserved customer segments combined with the government’s thrust on financial inclusion has resulted in a rapidly-increasing demand for capital by Indian households.

The startup has tried to address this aspiration by using its proprietary scoring techniques focussing on exploring new ways for better customer assessment to determine ‘credit-worthiness’ of ‘thin-file’ or new-to-credit borrowers using various forms of non-traditional data.

OptaCredit had launched its operations in 2017 and since then, it has deployed machine learning algorithms on various customer data-sets which help analyse and capture complex patterns in repayment data. This helps the startup in making better credit decisions eventually leading to lower portfolio delinquency rates without negatively affecting approval rates.

Further to the motivation, this is what Kumar said about the competition he foresees in the market, “There are multiple fintech startups cropping up, but every startup focusses on varied niches and differentiation in sourcing or delivery models. Fintech startups in the personal lending space including Shubh Loans focus on grey and blue-collared workers whereas OptaCredit focusses on white-collared workers. Despite varied competition like Qbera, Moneytap, Cashe, etc. every fintech startup is focussed on a niche, which in itself is a very larger target market.”

According to the company, it is on the track to lend over approx. $16 Mn (100 Cr) by the end of 2018 and it will leverage on the facility and future partnerships to continue its expansion of providing timely access to credit and expand to more geographies in India.

Forecasted to cross $2.4 Bn by 2020, as per a report by KPMG India and NASSCOM, India is currently home to more than 500 fintech startups, whose collective aim is to attain financial inclusion. This month another SME lending startup Lendingkart raised $4.7 Mn (INR 30 Cr) in its first-ever foreign debt funding round from a Dutch development bank – Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO)