KreditBee eyes offline expansion to reduce loan disbursement timelines

Online lending start-up KreditBee is looking to set up physical stores to expand business and reduce loan processing time. This comes a few months after it raised $200 million in a Series D round despite the ongoing funding winter.

Since its major fund-raise in January this year, the Bengaluru-based start-up has been diversifying its digital product offerings through B2B financial products, including unsecured small and medium enterprise (SME) loans. But now it will go phygital (physical and digital), Madhusudan Ekambaram, co-founder and CEO of KreditBee told Moneycontrol.

KreditBee, originally known for its personal loan products, has already launched its unsecured SME loans of ticket sizes Rs 3-7 lakh with repayment tenures of 12-36 months. This line of credit currently adds up to about Rs 30 crore of monthly business, compared to Rs. 1,500 crore of business from other existing products, Ekambaram said.

The start-up was earlier offering only personal loans of up to Rs 4 lakh to salaried individuals in partnership with non-banking financial companies (NBFCs), including IIFL Finance, Northern Arc Capital, Vivriti Capital, Poonawala Fincorp, PayU Finance, and Piramal Finance, among others.

The platform is on track to surpass assets under management (AUM) of $1 billion over the next few months.

Going Phygital

“Where many people are trying to go digital, what we realised is beyond a certain number of products, you have to go a little bit physical. So, it's a reverse journey for us. That's the diversification aspect for us in terms of what we're trying to do this year,” Ekambaram said during an interaction on the sidelines of the Fintech Festival India in Mumbai.

According to Ekambaram, through these channels, KreditBee will also be processing the loans faster. So, for loans that take seven to 10 days to process, the start-up is exploring ways to do that in 48-72 hours through these offline touch points by using its existing technology.

“It's not going to be as easy as the digital way of doing things. There are also going to be a lot of views because we are not the first ones to do this. There are already average expectations of how the physical stores would do it. But the biggest difference we are trying to bring in is add more digital perspective to it. So, there will be a lot of digital focus, even if it is a physical store,” he added.

KreditBee is going to set up its stores with a region-specific approach. These stores will first come up in various cities and towns of Karnataka by the end of FY24, and could follow a hub-and-spoke model, wherein there will be a main branch and multiple smaller dependent branches. It will first expand into the southern states followed by the rest of the country.

Ekambaram said he will also hire industry leaders with expertise in traditional offline lending to run this vertical.

On major fund-raise

KreditBee raised $200 million in two tranches of Series D round from Azim Premji’s Premji Invest, Advent International, Motilal Oswal Alternates, TPG-backed NewQuest Capital Partners, and Mirae Asset Ventures. While the start-up did not disclose its valuation post this round, according to TechCrunch, KreditBee is currently valued at around $680 million.

“There are different reasons why people raise funding. We have not been a burn company. We have been profitable from FY19 barring the COVID period. Typically, a lending company raises funding because of one technical reason which is called debt to equity leverage. That means, for every one rupee of equity, we can get about Rs 3-4 of debt for unsecured lending,” Ekambaram said.

“So, now we have reached a certain threshold of debt to equity leverage, and therefore, we had to raise equity to further grow our AUM. So, that was the reason why we went for funding," he explained.