Tiger Global-backed savings startup Jar to foray into digital lending business

The startup, which lets users save small amounts daily in digital gold and other avenues, will be partnering with non-banking financial companies to offer loans to customers.

Tiger Global-backed Jar has become the latest startup to join the digital lending frenzy as the Bengaluru-based digital gold savings platform looks to accelerate its monetisation efforts after generating just about Rs 70 lakh in operating revenue in its first full fiscal year FY22 (2021-22).

The startup, which lets users save small amounts daily in digital gold and other avenues, will be partnering with non-banking financial companies to offer loans to customers, people aware of the matter told Moneycontrol.

Nishchay Ag, co-founder of Jar confirmed the development to Moneycontrol and said that the company has established tie-ups with Liquiloans and a few more NBFCs.

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“Digital lending was always in the roadmap for us. We want users to give access to loans while helping them save money,” Nischay told Moneycontrol.

Jar’s move to jump on the digital lending frenzy comes at a time when several fintech startups, including some of the most-valued companies in India, are putting their foot down on lending, as India continues to remain a credit-starved market.

Many fintech companies, including PhonePe, are looking to apply for NBFC licenses to lend from their books. Fintech companies with digital lending as one of their main offerings have also cornered funding in India so far this year.

Earlier this week, neobanking platform Jupiter also 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.

Penetration of India's Unified Payments System and robust demand for personal loans and higher working capital requirements has attracted many players into the business of Digital Lending. In fact, credit offtakes reached a 11-year high in FY23, as per a Care Edge report.

The Jar app was founded in 2021 by Nishchay AG and Misbah Ashraf, and is built on the idea of helping Indians make investing a habit.

In February of 2022,  the startup bagged $32 million in Series A funding led by US investment firm Tiger Global.

The Jar app, which can be allowed to look at the transaction history, rounds up an individual’s daily spending and puts some money aside as an investment.

Users’ investments in digital gold is backed by physical gold of the same amount and they can choose to withdraw that much gold or liquidate their investments at any time. The company partners with Paytm and Safegold for helping users invest.