Sequoia and Tiger Global-backed Jupiter secures NBFC licence

Jupiter, founded by Gupta, provides a platform with a simplified user interface that allows users to deposit and withdraw funds

Neobanking platform Jupiter has secured a non-banking financial company (NBFC) licence from the Reserve Bank of India to enter into the lending business, a move which will double its disbursal rate for the year, founder of Jupiter Jitendra Gupta told Moneycontrol.

"We were lending in partnership with an NBFC under the Loan Service Providers (LSP) model, but the process is very cumbersome. It is not an easy model to make economic revenue. With the new licence we will be able to scale our business fast," said Gupta.

The startup will be offering the loan under Amica Financial Technologies, the private entity which operates Jupiter, Gupta said. "With this licence, we will have better control of destiny, have the direct integrations for the KYC and will be easier access and offer better to customers and chase scale in a very formal way," he added.

Gupta also said that the license will help in addressing the many uncertainties and overcome regulatory hurdles.

"Today under the Digital Lending Guidelines there are some grey areas around FLDG (First Loan Default Guarantee), scrutiny on what is allowed and not allowed in digital lending, loan app bans...There are so many uncertainties and with the licence, we can get this out of the way," Gupta said.

To date, the company disburses small ticket loans of less than Rs 50,000 with a tenure of 3-6 months through Trillion Loans NBFC. However, with the new NBFC licence, Jupiter will look at offering loans from Rs 50,000 up to Rs 1 lakh.

"We will be continuing with the existing partnership and will look at lending through both the models for some time...we will tap into new customers for the NBFC licence," Gupta said.

Jupiter, founded by second-time entrepreneur and former banker Gupta, provides a platform with a simplified user interface that allows users to deposit and withdraw funds. The company also offers debit and credit cards in partnership with traditional banks such as Federal Bank.

"With the NBFC licence, we will now be able to even take up co-lending with banks. That is a big opportunity for us," Gupta mentioned.

Economic Times was the first to report the developments.

In January of 2023, Jupiter raised Rs 100 crore (about $12.5 million) in venture debt from Alteria Capital as the startup was looking to scale and expand lending products in India. In 2022 the startup raised around $87 million from Tiger Global, QED Investors, Sequoia India and Matrix Partners.

Gupta said that there will be an equity infusion of Rs 100 crore from Jupiter to develop the NBFC product and the startup will be looking to raise a loan from banks for an additional Rs 100 crore.

"We are infusing our own equity of Rs 100 crore and will be raising an equivalent of debt from banks," he said.

Jupiter, which raised more than $160 million (Rs 1,300 crore) in private market funding since its inception in August 2019, recorded a total revenue of Rs 19.3 crore in FY22. The company presently has a disbursal run rate of Rs 25 crore a month (around Rs 300 crore a year).

"This year's internal goal for us is to clock around Rs 600- Rs 700 crore of disbursement for the year, The revenue profile will increase and with the licence, you end up making 2-3 percent more margin," Gupta added.