How Consumer Credit-Focussed NBFC Stashfin Achieved 4x Growth In Revenue In Three Years

India has traditionally been a less-credit market. True, there had been a frenzy during the Covid years and even post-Covid times, leading to credit card adoption and spending. But banks are now curbing new issuances due to rising delinquencies. September 2024 saw a 30% MoM decline per the RBI data, and the central bank continues to clang the cautionary bell against unsecured credit. In fact, credit growth is seeing a slowdown amid projections of lower economic growth (6.5–6.8%) in FY25. This could be a cause of concern as healthy credit growth tends to spur the economy.

If the credit industry landscape is not too satisfactory even when India is reportedly half a decade away from turning into a $5 Tn economy, imagine the ground realities a decade ago. As of December 2011, there were around 1.8 Cr cards in India, which reached 2.03 Cr by the end of 2014. Stringent eligibility criteria and lack of financial inclusion caused the sluggish growth.

The Wharton alumnus, who worked as an investment banker and a private equity investor with stints at organisations like Goldman Sachs, Lehman Brothers and General Atlantic, faced an unexpected hurdle after returning to India in 2011. Despite his global credentials, he was deemed ‘new to credit’ and struggled to obtain a credit card.

“When he couldn’t secure a credit card on his own and had to ask his company to get him one, he realised that the system was fundamentally flawed, especially for middle-income Indians,” said his spouse, Shruti.

But unlike those who blamed the system, the couple took action and set up Stashfin, a non-banking financial company (NBFC) offering consumer loans to improve lives.

Shruti, a Columbia University alumnus and a chartered accountant by profession, had earlier seen the ease of accessing credit in the US. “If the West can do it, why not the East,” she mused, aligning naturally with Stashfin’s mission and joining the founding team.

It was another garage startup; only the couple ran it from Shruti’s father’s basement in Delhi. But within months, the venture saw rapid growth, moved to a proper office, and the team expanded 6x, from 20 to 120. By 2019, Stashfin’s assets under management (AUM) grew to INR 500 Cr, and the fintech firm leased an even larger office.

How Stashfin Grappled With Covid-19 To Recover And Grow

The onset of the Covid-19 pandemic forced the startup to scale down. Loan disbursements were halted entirely, with INR 100 Cr retained as a cash reserve to service basic operations. Although the pandemic had hit the NBFC-MFI sector hard, a supportive policy framework ensured a partial recovery. Liquidity was managed by rationalising expenses, leveraging moratorium on borrowings and financing support extended through the RBI until collections started to come in.

Stashfin adopted a lean, tech-first model (more on that later) and an agile approach to endure the crisis in a risk-averse market. “Embracing change proactively and using smart technology helped us control costs and remain cash conservative,” said Shruti.

Stashfi’s prudence and credit discipline worked well in challenging times. Today, it empowers millions of Indians with easy access to credit. The platform offers loans of up to INR 5 Lakh with flexible repayment terms extending to 36 months and competitive annual interest rates starting at 11.99%.

Its core customers are professionals aged 28-35 who rely on these loans for practical requirements like home improvement, educational expenses (tuition fees) and upskilling costs. These finances come in handy when credit cards fall short in areas like medical bills, travel, wedding, gadget buying and more.

With more than 4 Cr app downloads and 40 Lakh approved users in 1K+ cities, Stashfin has rapidly aligned with growing consumer needs and emerged as a full-stack financial services platform in 2024. It has now diversified into insurance, curated solutions for bonds, payments and commerce and eyes a third-party application provider (TPAP) licence from the National Payments Corporation of India (NPCI) for UPI-based payment and credit solutions.

“These milestones have strengthened our market position while driving digital innovations and inclusion across India’s growing economy,” the cofounder said.

The outcomes were impressive post-pandemic. Backed by INR 6K Cr in funding from global investors, Stashfin clocked INR 800 Cr in revenue, INR 68 Cr in net profit and INR 2K Cr in AUM in FY24. In the past three years (FY22-FY24), its user base grew fivefold and it currently serves more than 30 Lakh customers. Loan disbursements during this period surged 14 times, surpassing $1 Bn, with repeat loan rates at 90%.

Revenue rose from INR 21 Cr in FY21 to INR 49 Cr in FY22, an impressive 133% increase, and soared further to INR 216 Cr in FY23, marking almost a 4x YoY growth. In FY24, the NBFC further grew its revenues to INR 800 Cr, an almost 3x YoY increase.

The fintech recently announced ESOP allocations worth INR 5 lakh and INR 3 Lakh for employees who completed five and three years, respectively. These initiatives are part of the venture’s INR 600 Cr ESOP pool.

Lean, Tech-First & Agile: The Three Pillars Building Stashfin’s Growth Momentum

From the outset, Stashfin prioritised a streamlined approach to achieve sustainable growth. For instance, it raised $5 Mn in a Series A round in 2017, one of the largest in the ecosystem at the time, but the team was cautious about how it spent the money.

Instead of scaling rapidly through mass hiring, the NBFC built a lean, adaptable team of growth-oriented professionals and implemented robust SOPs to maximise operational efficiency. Its current team of 170 is significantly smaller than most NBFCs, which are similar in size and scope. “For us, lean and agile was the way to go. We wanted to stay flexible and adapt quickly,” affirmed Shruti.

Another pivotal choice was to develop its core systems in-house. Rather than purchasing business software off the shelf, it built technology tools from the ground up, including a loan management platform, a ticket management system for grievance redressal and a CRM for customer outreach. Additionally, big data-based machine learning models are integrated into its decision and risk assessment engines for rapid evaluation of credit risks, speedy loan disbursals and enhanced efficiency.

Stashfin’s multi-cloud, highly scalable infrastructure is designed to handle a large volume of concurrent requests, ensuring smooth service even during high-traffic periods. It can handle 44 Mn API calls annually. Simply put, these are data or service access requests a software application makes to another for seamless operations.

With a microservice-driven architecture in place, Stashfin can continuously innovate and quickly roll out new products and features to meet market demand, claimed Shruti, adding that its in-house tech stack is the critical backbone that gives the company greater control, helps it scale rapidly and build better products.

The NBFC initially invested heavily in technology and marketing to solidify its position. While the marketing expenditure was around INR 8-9 Cr during pre-pandemic times, its technology input nearly doubled.

“But during Covid, our proprietary tech and agile approach kept the business up and running during the pandemic. It helped us focus on customer requirements, manage resources efficiently and streamline marketing efforts without overspending,” said Shruti.

“With the right tech and optimised processes in place, the economies of scale began to materialise after FY21, and our investments in strategies and team paid off,” she reflected. “We maintained a flat burn rate throughout but enhanced our technology to cater to more customers seeking financial flexibility. On average, satisfied users interact with the platform 10 times annually, reflecting one of the industry’s highest lifetime value (LTV) metrics.”

Consumer-Centric Innovations: The USP That Makes Stashfin Stand Out 

Despite Covid setbacks, Stashfin has emerged as an outstanding player, offering its borrowers convenient features similar to credit cards or what Bajaj Finserv offers via its Insta EMI Card.

The appeal lies in its user-centric model, ensuring that people can raise small and manageable amounts instead of taking out the minimum loan (often INR 50K or more) typically provided by a lender. This means people have greater control over borrowing costs and repayments.

At Stashfin, the minimum loan starts at INR 30K, but borrowers can withdraw as little as INR 1K depending on their requirements. For example, a customer with a credit limit of INR 5 Lakh but needing only INR 1.5K for a specific expense can withdraw that precise amount. This kind of incremental lending means interest is charged only on the amount used. As Shruti pointed out, why pay for the whole pizza when you only want a slice? This encapsulates the ethos of the flexible credit model.

This model is a financial lifeline for managing recurring expenses like tuition or course fees. Borrowers can secure a higher overall credit limit but have the flexibility to withdraw and repay smaller, manageable amounts as needed.

Besides, Stashfin offers loans without foreclosure fees and ensures an interest-free period for repayment, typical advantages extended by lending banks and credit cards. In the first case, borrowers can repay their loans anytime, allowing early closures with no added cost.

About 40-50% of its customers also take advantage of a 30-day interest-free period. Users pay a transaction fee of 1.8% for short-term borrowing and can repay within 30 days without any interest.

“If you need INR 30K for a personal expense but know your salary will arrive in three days, you can draw the amount, pay just 1.8% and settle the loan when your salary arrives,” explained Shruti. “This free credit period is a game changer, delighting customers, driving higher transaction volumes and boosting revenue.”

It has also developed the Sentinel Program tailored for army personnel and veterans, which now accounts for 20% of its portfolio. Although it is challenging to onboard these people serving in remote areas, they are high-quality borrowers as the government guarantees their salaries. Hence, the project thrives.

Strong Unit Economics & Risk Management Curb Non-Performing Assets

The founders claim Stashfin has been profitable from the beginning based on unit economics. Revenues are generated through interest incomes, application processing and transaction fees, late payment penalties, investment and asset management, cross-selling financial products and more.

Also, it is the first NBFC to offer non-convertible debentures (NCDs) on the BSE to grow its capital pool. The move came after capital market regulator SEBI amended its regulations on the issue and listing of NCDs in July 2024 and reduced the face value of debt securities from INR 1 Lakh to INR 10K. Stashfin’s initiative aims to democratise bond investments and increase retail access, strengthening its vision to enable financial inclusion.

Investing in an NBFC bond involves lending money to the issuing NBFC for a fixed period. In return, investors receive regular interest payments or coupons and the principal at maturity. “The interest rate is predetermined and fixed, providing a predictable income stream,” explained Tushar.

Stashfin’s robust risk management strategy has kept its non-performing assets (NPAs) below 5%, with its lifetime losses (write-offs/bad debts) also remaining around that number.

The platform employs a mix of in-house and outsourced processes for its operations. A 45-member internal collection team and a 16-strong legal team handle its core activities. On the other hand, external vendors manage fieldwork and customer outreach with the help of stringent protocols to make sure customer data is protected throughout. Payments via the app are fully digitalised, and borrowers can use UPI, debit cards or net banking for the same. This digital-first approach has minimised risks of fraud and improved operational efficiency.

In essence, Stashfin’s disciplined focus on unit economics, technology-driven growth and risk management underscores its ability to scale up sustainably while maintaining a customer-centric focus.

Of Star Endorsements And Marketing Drive

Now that it is business as usual, Stashfin has brought together the Bollywood glitterati, including Anil Kapoor, Alia Bhatt and Kartik Aaryan, to lead the fintech’s marketing campaigns. The platform spent INR 70-80 Cr in marketing in FY24 out of a total expedite of INR 700 Cr across diversified channels.

However, some celebrity endorsements averaged 20 Mn views or more, underscoring the impact of celebrity endorsements. The platform also spent on referral programmes, gold or cash rewards, newspaper callbacks and the Sentinel Program – sessions on financial education across army cantonments – generating widespread enquiries, attracting attention and building trust to tap into unserved and underserved markets.

The pandemic tested the survival skills of most NBFCs in India, bringing critical activities such as debt servicing, repayments and liquidity to an abrupt halt. Stashfin was no exception, but its founders showed exceptional grit in several areas to stay afloat.

“Resilience is the key. But there are fundamental challenges in this domain, and we have learnt to cope with them to pave the way for the future,” said the Agarwals.

From Recovery To Growth & Beyond: The Challenges & The Roadmap 

The pandemic tested the survival skills of most NBFCs in India, bringing to an abrupt halt critical sectoral activities such as debt servicing, repayments and liquidity. Stashfin was no exception, but its founders believed it had not merely thrived due to resilience. “Instead, there are fundamental challenges in this domain and we have learnt to cope with those to pave the future path,” said the Agarwals.

As of now, the loan approval rate is 2% or so. Most applications get rejected due to unmet credit criteria, fraud or other red flags identified during a rigorous approval process. Stashfin conducts thorough credit checks, ensuring borrowers are not overleveraged or behind on payments. This vigilance sometimes leads to cancellations of previously approved credit lines if financial behaviours cause concerns.

The next most critical factor is dealing with fraud. Many applicants reside in shared accommodations without formal lease agreements, thus complicating address verifications. Others may game the system by claiming high salaries while using burner phones.

“Our data analytics reveal that in India, people often spend three times their monthly salary on their phones. So, the use of burner phones is a strong fraud signal. What they claim does not match with their low-cost devices,” said Shruti.

To counter these risks, Stashfin dives deep into anomalies like incongruent customer behaviour, phone model and bank statements rather than physical address or credit scores. It also uses tools like device binding and IP tracking to identify multiple applications from the same source.

However, a low credit score is not always a deterrent. A consistent income for the past six months is a more reliable indicator of a person’s financial position. Therefore, credit limits are adjusted – increased or decreased, as the case may be – depending on the history of prior credit repayment and other critical factors.

Despite these challenges, the founders are confident that the demand for NBFC credit will remain critical for economic growth and the share of retail credit in the total NBFC space is projected to reach 56% in FY25. This augurs well for Stashfin and its peers.

The platform eyes steady growth in the next fiscal year based on new product launches. The only glitch: The RBI’s relentless move to curb the rise of consumer loans and the way many NBFCs were charged with and heavily fined for non-compliance in areas like KYC, anti-money laundering and more.

Meanwhile, Stashfin aims to serve its aspirational customer base and ensure that they access credit responsibly. As Shruti put it, “Our goal is to serve customers who value their credit history and use it as a stepping stone to bigger financial goals like home or car loans.”

When the country grappled with the pandemic, experts noted that no matter how formidable the headwinds were, NBFC players consistently transformed risks into opportunities. If Stashfin and its peers continue along that path and adapt to fast-evolving compliance norms, they can enhance consumer convenience and strengthen their foothold in the competitive financial services market.

[Edited By Sanghamitra Mandal]