With a unique selling proposition (USP) of loan disbursements within 60 seconds and collection of digital transaction data of the merchants through aggregators such as wallets and PoS machine, a Mumbai-based fintech, Happy Loans disburses loans of average ticket size of Rs 40,000 to Rs 100,000 to micro businesses, according to a senior executive.
“What we do is look at the transaction data of the merchant which is either on the wallet or on a PoS machine. We don’t look at the banking or ITR but we look at the transaction data. We tie up with aggregators for these things to get merchants or customers,” said Sourabh Soni, Business Head, Happy Loans.
He added, “We only consider digital data for underwriting because we don’t have any manual leg so we don’t look at any physical stuff or data in cash or transactions in cash. ”
Founded in 2017, by Manish Khera and Gautam Ivatury, the startup aims to offer underbanked population, offering products that can be directly operated digitally, minimising the documentation and KYC verification requirements.
As the startup is fully digitised, Soni said it is quite challenging for them to lend merchants with only cash transaction as there is no digital footprint of it and it will be a challenging task for them during repayment.
Liquidity crisis
While discussing the liquidity crisis in the industry Soni said, “Entire industry was hit with this. We are also part of the industry. If I say that we were completely untouched by it that would be a wrong assumption and a wrong statement to give. Having said that, we had our own alternatives for arranging capital product which we have already done.”
In terms of the asset-liability mismatch, Soni claimed as the company which takes loans for 3 years and gives loans for 3 months it is far more skewed in our favour from the asset-liability mismatch.
“That’s where we get a large cushion and our lenders understand that Happy as a company is completely untouched by at least the asset-liability mismatch,” he added.
As the company raised money from NBFCs, Soni said, “We might not be having an asset-liability mismatch but the company who is funding us or who is giving loans to us as an NBFC might be touched by an asset-liability mismatch situation.”
He added, “I am not saying that all the ones that who lend money to us were affected but there were a couple of them. They also had to slow down their disbursement. But we are not dependent on only one or two players for doing business we have multiple ways to raise capital. From that perspective, there was not a bigger problem for us.”
