Fintech is leading India’s mission of financial inclusion. Leave aside the monetary aspects of fintech, it is fueling the dreams of young India today. No wonder we have the fastest growing middle class in the world. Access to internet, clubbed with wonderful technologies are shaping a new future for us. On that very note, today, we discuss about a very unique fintech platform called “Neogrowth“. The platform is unique in it’s business model, underwriting technique and customer base. Let’s find out how.
Neogrowth’s Target Customers:
Most of us who are reading this blogpost, are fortunate enough when it comes to borrowing money. However, think of small businesses. People who sell garments in the crowded streets of a city. Women, who single handedly run a salon to support their family and dreams. Youngsters who plan to take the mom and pop stores we see today, to the next level. Do you think banks are equally generous while lending them money? No, they aren’t. These MSMEs are often asked to produce documents like ITR, Credit History etc. These people either do not have access to these documents or are too naïve to start acquiring them. And even if they do, there is no guarantee that bank will approve their loan.
Underwriting Model: Assessing Client’s Credibility Like No Other Lender
This is where Neogrowth comes into the picture. Neogrowth has come up with a fancy model to assign the risk factor of a loan while lending it to their clients. They evaluate the data around digital payments being processed at the retail outlet. So, history of UPI, POS machines, online payments is evaluated by them. Basis that, they decide what amount is to be lend to the customer. Smart right? This gives a fair idea of how business is performing in the real time. Also, as a company, you do not need any credit history to gauge the trustworthiness of a customer.
Is it just me, or anyone else thinking why didn’t they come up with this idea? It was always in front of our eyes right?
Reasons Behind Borrowing:
Neogrowth offers short term loans for a period of about 18-24 months. Essentially, they want to meet the customer’s working capital requirement. They also may help customers in some sort of expansion wherein a grocery store might want to buy an additional refrigerator, a small salon might plan another branch etc.
Repayment Model- Another Masterstroke:
This is yet again a characteristic method of recouping money from the clients. I believe that tech alone cannot do anything. It is the human mind that does the magic. In this case, Neogrowth has come up with a fine mode of repayment. Their customers don’t pay EMIs the way people generally do on the loans. Rather, the money is deducted daily from the online payments they receive through POS terminals.
They have tied up with POS vendors wherein all the money earned by dealer in a day is sent to Neogrowth directly. Neogrowth deducts the daily installment from that money and refunds back the remainder to the client.
This is typically helpful given the customer base they have. If you have taken a loan that demands 30,000 EMI per month, rather than paying it in lumpsum for a day of the week, you would prefer to pay Rs. 1,000 daily.
Neogrowth is catering to 30000 customers. The total disbursed loans were of the range of 6200 crores. This has shot up multifold from April 2020 numbers of 20000 customers and 1400 crores in the loan amount. Imagine the number of families that could support their living during the pandemic due to platforms like these.
Here are some video testimonials of the customers who have benefited from Neogrowth.
In a statement, Arun Kumar Nayyar, CEO, NeoGrowth said, “NeoGrowth has always focused on creating a positive social impact by lending to first-gen entrepreneurs and small businesses. Our business offerings are based on the dual axis of customer centricity and economic growth of all stakeholders. While speaking to retailers across the country, we learned that due to complex documentation and delays in loan approvals, they missed out on lucrative business opportunities.
NeoCash Insta Loan is created with the specific goal of addressing all these problems faced by retailers across the country and we aim to be an equal partner in charting their growth trajectories.” (Source)
If this doesn’t melt your heart and fill it with warmth and joy, I don’t know what would. Not only it a sustainable business model, it is also focusing on the bigger purpose. It’s like saying CSR is your business itself. We all have heard the term ‘American Dream‘ a lot. This time, likes of Neogrowth, are building the ‘Indian Dream‘, one business at a time.
Have you come across any such business model in the past? What do you think about this one.
Got questions? Want to take it to the next level? Reach out to me using your preferred platform from the links below
Until next time..
This Blogpost is in association with Blogchatter’s #BlogchatterA2ZChallenge. In this challenge, I write on fintech on a daily basis for the month of April. You can checkout the other posts of this series from here.