P2P Lending Startup Finzy Raises $1.3 Mn In Pre-Series A Funding

Bengaluru-based P2P lending company Finzy has raised $1.3 Mn in Pre-Series A round of funding from a group of investors.

The startup plans to use the funding to accelerate growth by investing in technology, making the processes leaner and faster and  in building the team. A significant amount of the funding will also be utilised for geographical expansion across Tier I cities to take Finzy’s value proposition to a wider audience.

Finzy is a digital platform that offers easy, secure, and quick process to its borrowers to get loans at personalised rate of interest. The  platform helps its lenders to earn monthly returns higher than most other asset classes.

Commenting on the development, Amit More, CEO and Founder, Finzy said, “Our investors firmly believe in the team, our product positioning and scalability of solution that we offer to our lenders and borrowers.  We have maintained a very focused customer centric approach while designing our products and processes, as a result in our first 10 months of operations we do not have a single default in any borrower EMI.”

Finzy is the first applicant for NBFC P2P license after RBI published its Master Directions on P2P lending industry in October 2017.

On the development, Abhinandan Sangam, Co-founder and CTO, Finzy said, “We are investing in newer technologies to scale the business and enhance customer experience. Our customers love us for the transparency and simplicity. We offer our borrowers complete flexibility of prepayments without any additional charges. We provide consistent 16% plus return to our lenders from their investment spread across granular loans. ”

Finzy: An Overview

Owned and operated by Bridge FinTech Solutions Private Limited, Finzy was founded in 2016 by Amit More, Abhinandan Sangam, Vishwas Dixit and Apoorv Gawde. Finzy connects borrowers looking for quick personal loans with low-interest rates to investors who are looking for a powerful new asset class that provides fair returns.

The startup claims that its focus is “on making the entire process of online lending simple, quick and easy.”

Finzy’s co-founder Amit More had been passionate about alternate financing industry while he was a banker in his heydays, the company shared in a blog post. The dreams turned into reality when in April 2016 RBI published a consultation paper on Peer to Peer (P2P) lending.

With an extensive research, analysis of global developments in P2P lending industry and study of the Indian lending landscape, he submitted his representations to RBI. Further, he visualised a product that he felt would transform the space of peer to peer lending and to make it a reality, he onboarded Abhinandan, who in 2016 was Practice Lead at ThoughtWorks.

The duo was confident that lending space was ripe for major changes and has tremendous scope to incorporate alternative methods of analyzing credit risk. The team had found the key and decided to use disruptive technologies to create a compelling value proposition for borrowers and lenders.

P2P Lending Space In India

In the still-nascent P2P lending industry, India is currently home to more than 30 players such as Faircent, LendBox, LenDenClub, IndiaMoneyMart, Monexo, Rupaiya Exchange, LoanBaba, CapZest, and i2iFunding amongst others.

Recently reports surfaced that the digital payments giant Paytm is in the process of seeking a licence from the RBI to operate a P2P lending platform. Paytm is aiming to leverage its 7 Mn offline merchant base to gain a stronghold in the country’s peer-to-peer lending landscape.

In January, this year, a number of these platforms came together to form the Association of P2P Lending Platforms. Headed by i-Lend founder Shankar Vaddadi, with Faircent founder and COO Vinay Mathews acting as the Vice President, the association will work in conjunction with the government and regulatory authorities on matters of compliance in P2P lending. Ultimately, the objective is to promote the cause of financial inclusion in the country.

Earlier in October 2017, the RBI released a list of directives pertaining to the registration and operation of NBFC-P2Ps in a draft, titled “Non-Banking Financial Company – Peer to Peer Lending Platform (Reserve Bank) Directions, 2017”

In its new guidelines, the RBI mandated a $307K (INR 2 Cr) capital requirement for all P2P lending companies, in a bid to ensure that lending platforms have enough “economic skin” in the game. Additionally, these companies must ensure that the aggregate exposure of a lender to all borrowers at any point of time across all P2Ps does not exceed $15,351 (INR 10 Lakh).

Similarly, the country’s central banking institution also placed a cap of $15,351 (INR 10 Lakh) on the total amount that can be borrowed at any point of time across all P2Ps. Further, a single investor is allowed to lend only $767.5 (INR 50,000) at any given point of time.

With P2P lending in India poised to grow into a $4 Bn-$5 Bn industry by 2023, the space is relatively young compared to the established markets in China, the US and Europe. The growth of the segment largely depends on the scaling opportunities as well as the funding available to continue their run, particularly for the growth stage startups such as Finzy.