Do you know what your CIBIL score is? A CIBIL score, a three-digit number ranging from 300-900, is based on your credit history, which is contained in your credit information report (CIR). The CIR, generated by a credit bureau, summarises the payment history of the loans and credit cards borrowed by you from all banks and financial institutions. The closer your score is to 900 (anything above 700 is a good score), the stronger your credit profile and the higher your chances of getting a loan or credit card.\r\n\r\nNow, most banks and financial institutions rely on the CIBIL score \u2014 it is the first screening criterion \u2014 to decide on borrowers\u2019 creditworthiness, Mumbai-based fintech startup CASHe has come up with its own, patented credit scoring system to provide short-term, unsecured loans to borrowers.\r\n\r\n\u201cWe have devised an alternative scoring system called \u2018social loan quotient\u2019 (SLQ), which is completely different from the current banking credit scoring system,\u201d says V Raman Kumar, the founder of the mobile-based credit lending startup.\r\n\r\nThe SLQ is independent of any bureau reports and generates its own scores based on the customer\u2019s social behaviour data. CASHe\u2019s SLQ rating system is fused with deep learning and artificial intelligence-based technologies that give insights into a borrower\u2019s credit behaviour. It indicates his\/her willingness and ability to pay his financial obligations.\r\n\r\n\u201cCASHe calculates a customer\u2019s credit score from a number of data points obtained from the borrower\u2019s smartphone \u2014 like his mobile and social media footprint, education, remuneration, career, and also financial history. Our SLQ scores are generated in real time to check whether or not he qualifies for a loan from CASHe,\u201d says Kumar.\r\n\r\nHe maintains that the process used by CASHe requires permissions to access data from the borrower\u2019s smartphone, similar to how social media platforms and messaging apps access data. Kumar explains that for credit scoring purpose, the CASHe app needs permission to look at the borrower\u2019s contacts and SMSes to check whether or not the borrower is getting his\/her salary on time. Besides this, copies of the borrower\u2019s PAN card, Aadhaar card, and bank account details are also required.\r\n\r\n\u201cI am giving a loan which is unsecured, I am not taking any securities from the borrower. So, I need to know everything about you for me to come to an understanding that, yes, you\u2019re worthwhile for me to lend to,\u201d Kumar says.\r\n\r\nThe founder claims that the SLQ is based on a proprietary AI-based algorithm developed by CASHe, and that the startup has also patented it as intellectual property.\r\n\r\nThe Reserve Bank of India (RBI) has licensed four credit bureaus to provide information related to the credit history of an individual. Banks and non-banking finance companies (NBFC) rely on credit information reports from these bureaus before approving loans and credit cards. The most popular credit information company operating in India is TransUnion CIBIL Ltd. The other credit bureaus are Equifax, Experian, and Highmark.\r\n\r\nThe founder adds that CASHe, as a licensed NBFC, is supposed to take up a borrower\u2019s CIBIL score as well as his\/her \u2018good\u2019 or \u2018bad\u2019 image at CIBIL, the credit bureau which collates credit information reports.\r\nBut what if a person doesn\u2019t have a good CIBIL score, Inc42asks? \u201cIt doesn\u2019t matter. Even if you have a CIBIL score of 900 (the highest in the range), but if you don\u2019t qualify in my (SLQ) rating, you\u2019ll not get a loan,\u201d says Kumar.\r\n\u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 \u00a0 CASHe Chairman & Founder, V Raman Kumar\r\nSo, How Does One Qualify For Loans From CASHe?\r\nKumar maintains that CASHe\u2019s easy-to-use mobile application frees the loan application process from tedious paperwork. He claims the startup can provide loans within just 10 minutes of submission of all required documents.\r\n\r\nSo, who can apply for a loan to CASHe? Salaried people who are earning at least $214 (INR 15K) per month are eligible to get loans worth upto 75% of their monthly salary from CASHe. Of this, 25% is allocated for EMIs. The borrower has the option to repay a loan in 15, 30, 90, or 180 days.\r\n\r\n\u201cIf one has already taken loans two-three times and is a customer with a good credit rating, we can increase the loan amount to 100% of his\/her monthly salary,\u201d says Kumar. He adds that plans are afoot to lower the interest rate basis of borrowers\u2019 SLQ ratings. \u201cIf you have a higher score, you\u2019d be eligible for a higher amount with a lower interest rate, but if you have a lower score, you\u2019d be eligible for lower amount with a higher interest rate,\u201d he explains.\r\n\r\nCurrently, the startup charges a monthly interest of 3% for 15- and 30-day loans, 2.5% for 90-day loans, and 1.9-2% for 180-day loans. Kumar says CASHe also plans to introduce a 365-day EMI soon.\r\n\r\n\u201cEvery month, CASHe provides more than $4.9-5.6 Mn (INR 35-40 Cr) worth loans to salaried professionals,\u201d says Kumar.\r\n\r\nSince the launch of the platform in April 2017, CAHSEe claims to have provided about $65.5 Mn (INR 460 Cr) in loan disbursal, with more than 2 Mn app downloads and an over 180K customer base. Of the total customer base, loans have been disbursed to over 70k customers, Kumar says. The startup plans to achieve $113 (INR 800 Cr) loan disbursal by the end of this fiscal.\r\n\r\nThe founder, however, declined to comment on the revenues being raked in by CASHe.\r\n\r\nApart from leveraging digital marketing to attract customers to the platform, CASHe also gathers leads from various financial institutions that provide loans based on the traditional CIBIL score. \u201cThey don\u2019t give loans to people who have less credit score. They in turn, refer them to us, and we pay for the referrals,\u201d says Kumar.\r\n\r\nTo Inc42\u2019s query on how the startup collects loans back from the borrower, Kumar says, \u201cIf we properly assess the profile of the borrower, the loans are paid back in time. There are multiple ways in which money can be repaid to us \u2014 UPI, IMPS, and NEFT transfers. In addition to that, we use eNACH. Here, we can make a mandate to the customer that on the due date, the money can be pulled automatically from his\/her bank account.\u201d\r\n\r\nThe National Payments Corporation of India (NPCI)\u2019s eNACH initiative is one of the newest methods of electronic payment. User needs to fill-up the NACH form to the concerned authority to debit the said amount from his bank every fixed day of the month.\r\n\r\n\r\n\r\n\r\n\r\nLending: Market Size & Competition\r\nKumar says that a lot of people in the 23-34\u00a0age group \u2014 the Millennials \u2014 don\u2019t want to commit to long-term loans. They also don\u2019t want to get into any long-term commitments involving high-value amounts. These people comprise blue-collared workers and salaried professionals.\r\n\r\n\u201cIndia has a population of more than 1.3 Bn and a third of this population is urban. The median age of people in India working and generating income is around 27 years. These people are Millennials who are either pre-credit or no-credit. We want to bring them into the credit rating system and give them a rating,\u201d says Kumar.\r\n\r\nThis allows us to build credit scores even for individuals with little or no formal credit information but who may actually be good candidates to disburse credit.\r\n\r\nCASHe has a lot of competition though. Many fintech startups and NBFCs promise instant credit decisions these days, with little or no paperwork, transparency in their offerings, and great customer service.\r\n\r\nThere are digital lending platforms such as PaySense, a Mumbai-based startup that is targeting to be a risk assessment provider for 16 Mn Indian households currently underserved by lenders. Similarly, Bengaluru-based LoanTap and Pune-based EarlySalary have stepped in to provide instant small-value loans, attractive repayment schemes, and quick disbursals.\r\n\r\n\u201cAlternative lending is the second most-funded and one of the fastest growing segments in the Indian Fintech space,\u201d according to the Fintech Trends Report \u2014 India 2017 by PWC. Alternative lending refers to digital lending platforms catering to different borrowing needs, including consumer, MSMEs, student loans, and mortgages. More than 225 alternative lending companies had been founded in India as of 2017.\r\n\r\nMeanwhile, the share of banks in the lending market has fallen with NBFCs registering a remarkable growth of 28% compared to the previous year. According to a BCG report, between 2014 and 2017, the share of NBFCs in total loans was estimated to have increased from 21% to 44%, whereas for public sector banks, it fell from 49% to 28%.\r\n\r\n\r\n\r\n\r\n\r\nAccording to Inc42 Datalabs, fintech startups attracted the highest number of funding deals in H1 2017. Total investment made in this segment during the period stood at $2 Bn.\r\n\r\nRecognising the potential of alternative lending, startups have started designing their value proposition to cater to these segments, providing loans and working capital based on innovative processes for risk assessment and disbursement.\r\n\r\nHowever, CASHe claims that its USP is its proprietary SLQ rating system. \u201cOther players in the market are offering loans but they don\u2019t have an alternative credit scoring system. They rely on credit bureaus scoring to decide on borrowers creditworthiness \u201d Kumar claims.\r\n\r\nIn October last year, CASHe raised about $3.07 Mn (INR 20 Cr) in debt funding from IFMR Capital in its NBFC company, Bhanix Finance and Investment. Prior to that, the startup raised about $3.8 Mn (INR 25 Cr) Series A funding from an investor group led by Mathew Cyriac, Senior Managing Director at Blackstone Group.\r\n\r\nThe startup doesn\u2019t want to fall behind in adopting latest technologies like blockchain. Kumar says CASHe is working on a proof-of-concept (PoC) project where blockchain-based smart contracts can be introduced into its platform. It is also exploring a use case for the hightech ledger technology in money transfers.\r\n\r\nWhile CASHe has already been bringing Millennials under the ambit of credit with its SLQ, touted as India\u2019s first alternate credit scoring system, it\u2019s efforts at incorporating blockchain are in the right direction and are likely to help the company make a mark in the cutting-edge and competitive fintech sector.