Kunal Shah-led Cred has seen its total loan book surpass Rs 19,000 crore, reinforcing its position as one of the largest lending portfolios among fintechs as it continues to scale its credit business.
Of this, Newtap Finance, Cred’s NBFC arm, contributed 2.7 percent of the total managed Asset Under Management (AUM), with the remaining share coming from its six other lending partners. Notably, Cred has maintained a lower-than-average non-performing asset (NPA) ratio of 1.1 percent, per an analysis by India Ratings and Research, compared to the 2.9 percent average for diversified NBFCs in FY24. This relatively low NPA ratio may be attributed, in part, to Cred’s focus on affluent customers, a segment that has likely helped the company manage its credit risks more effectively while other lenders face higher NPA challenge.
Lending has emerged as one of Cred’s core revenue streams, alongside payments and insurance. Acting as a loan service provider (LSP), Cred facilitates personal loans through partnerships with banks, financial institutions, and its affiliated NBFC, Newtap Finance.
Shah indirectly owns 76 percent of Newtap Finance through his wholly owned entity, Newtap Technologies, while Cred holds a 23.6 percent stake. Shah and Cred had acquired a controlling interest in Newtap in 2022, but Cred’s attempt to increase its stake further was blocked by the RBI in 2023. Since then, Newtap has focused on strengthening its positioning as an independent NBFC.
Read: How Cred makes money
Exploring fundraise
Amid its lending expansion, Newtap is evaluating an equity fundraise of Rs 550 crore, though discussions remain at a preliminary stage and depend on regulatory approvals.
“NFPL plans to raise additional equity capital of Rs 550 crore over the near-to-medium term from Newtap Technologies and Cred, subject to regulatory approvals,” per a credit rating agency’s assessment.
So far, Newtap has raised Rs 149.7 crore in equity capital, with Rs 35.7 crore coming from Cred and the remainder from Shah and other promoters. Cred did not respond to queries regarding the fundraise.
Inside Cred’s lending push
Newtap, though relatively young, has been steadily expanding its loan portfolio. Salaried individuals account for 60 percent of its AUM, while self-employed borrowers make up the remaining 40 percent. The company primarily offers loans averaging Rs 1 lakh, with a maximum tenure of 60 months at an 18 percent interest rate.
Even as the RBI tightens norms on unsecured lending, Cred has reported sustained interest from its partner financial institutions. The company attributes this to its affluent customer base, as the stress in unsecured loans is more pronounced in subprime and small-ticket segments.
Cred's extensive transacting customer base plays a crucial role in Newtap’s lending strategy. As an LSP, it helps source loans and provide credit assessment support to lending partners.
As of December 2024, Cred’s monthly transacting user base had crossed 1.2 crore, growing at a CAGR of 30 percent.
Borrowers on Cred’s platform are pre-approved based on an analysis of their financial behavior. The entire loan lifecycle—from sourcing to disbursement—is managed through Cred’s in-house tech platform, while underwriting and risk assessment are handled by the lending NBFCs. Repeat disbursement rates have jumped from 32 percent in FY22 to 57 percent in FY25.
Cred currently facilitates loan distribution for IDFC First Bank, Saison Finance, Liquiloans, Vivriti Capital, DBS Bank India, and Newtap. Additionally, Newtap has a co-lending arrangement with Yes Bank and L&T Finance, operating mainly under non-first-loss default guarantee agreements.
Read: Kunal Shah to take on Zerodha, Groww? Cred-owned Spenny applies for stock broking licence
Cred’s financial performance: Path to Ebitda breakeven in FY26
Cred reported a loss before tax of Rs 1,661 crore in FY24, despite a 67 percent YoY jump in revenue to Rs 2,473 crore. However, its operating losses shrank by 41 percent, aided by a 40 percent reduction in customer acquisition costs and a 36 percent drop in marketing expenses.
“The management expects operating losses to decline by more than 50 percent in FY25, moving the company closer to Ebitda breakeven. This positions Cred well on its path to profitability by FY26,” per the analysis.
On the other hand, before accounting for bad loans, Newtap earned a pre-provision profit of Rs Rs 10.1 crore in the first nine months of FY25 (compared to Rs 11.74 crore in FY24). However, after factoring in Rs 12.8 crore in loan write-offs—which more than doubled from Rs 6.4 crore in FY24—the company posted a net loss of Rs 5.35 crore, compared to profits previously.
Many of Newtap’s earlier-issued loans are now maturing, and some borrowers are struggling with repayments, leading to higher write-offs and increased credit costs. However, Q3FY25’s profitability indicates a potential turnaround.
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Rising credit costs and NBFC sector trends
As Newtap expands its loan disbursements, it faces mounting credit costs. Loan write-offs and delinquencies have risen, pressuring profitability. Its gross NPA, including write-offs/opening AUM, increased from 3.4 percent in FY24 to 4.2 percent in 9MFY25, reflecting broader challenges in the NBFC sector, where many players are navigating a slowdown in unsecured lending and rising credit costs.
Fintech NBFCs: Karma of unsecured lending bites in 2024; face rising NPAs, crumbling asset quality
According to Fitch Ratings, growth in unsecured personal loans and credit card borrowing slowed to 11 percent and 18 percent YoY, respectively, in the first half of FY25, after the RBI increased risk weights on unsecured lending.
This was down from 22 percent and 25 percent YoY growth, respectively, over the past three years to FY24.
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