“We also noticed that the unlicensed lenders had more product innovation than the streamlined licensed lenders and hence wanted to merge the two with the benefit of credit reporting, credit awareness & better credit outlook for the consumer,” Pinapala told ET Digital.
Building the path to credit
According to Pinapala, for a country with 1.3 billion people, the number of people with access to credit is dismal. Less than 40 million people (super-prime consumers) in India have access to a credit card and less than 100 million (including the super-prime) Indians have accessed unsecured credit from any credit institutions in India, these are the prime consumers. Nearly two-third (150 million) of Indians with a credit file are thin-filed and come under the sub-prime and super-subprime segment and have little access to credit, these are basically the under-served consumers. Over 250 million employed Indians have never accessed credit–the unserved consumers.
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“Traditional Indian lending institutions are averse to offering unsecured credit that aids consumption. Considering the above numbers, Vivifi wants to offer ubiquitous digital credit to over 300 million Indians that are deprived of formal institutional credit, with no prejudices or biases and only based on the customer’s ability to repay,” he said.
Vivifi’s flagship service is FlexSalary, a personal emergency line of credit that offers credit starting as low as Rs 1,000 for customers earning as low as Rs 8,000. The line of credit can be drawn anytime with interest and fees charged only when used. It provides to pay anytime the minimum balance or payoff or anywhere in between with no penalties. Besides this, the lines can also expand up to 100% of income with the onetime approval valid for three years.
The company will also launch another service called FlexPay, which delivers credit using UPI infrastructure with limits as low as Rs 500. FlexPay is aimed to enable customers to use their credit limit anywhere such as to transact with merchants (offline or online) by scanning a QR Code, pay recurring bills over BBPS, withdraw cash by transferring into their bank account using IMPS, transfer money to peers, among others.
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To get access to credit from FlexSalary or FlexPay, the customer needs to sign up only once in the app or website. Customers are given complete flexibility to choose their payment amount instead of mandating a fixed payment. This means customers can pay off the full amount or portion of principal or pay just the fees and due interest or any amount in between based on their financial situation. Vivifi also does not charge any penalty of any kind so that the customers are not bound by EMI or full repayment demands.
“We receive over 5 lakh unique visitors per month to our website / app and over 1 lakh loan applications per month for a personal line of credit,” Pinapala said.
He added that Vivifi has approved over 60,000 customers and have disbursed over Rs 200 crore with average lines of credit around Rs 15,000 in the last two years. The firm has witnessed revenue of growth of 100% year-on-year.
The lending business, however, came with challenges. “One of the foremost challenges was to get reliable domestic debt capital for on-lending, as we are the pioneers offering sachet-sized credit to customers considered stressed or undesirable to the traditional lenders. This was further complicated by our obstinate belief in offering a true open-ended line of credit, providing complete flexibility to our customers that wasn’t understood well by the traditional wholesale lenders (Banks and NBFCs),” he said.
To overcome the aforementioned challenge, the Vivifi team is trying to get overseas debt capital with hedge-fund partners who had worked with the co-founding duo previously.
Language barrier and awareness of line of credit has been another concern. To address this, the firm is working on video, voice and image-based on-boarding processes.
In the meantime, Vivifi has earned Rs 20 crore in FY 19-20 and expect to clock more than double of their revenues this year despite the affects of COVID-19. According to Pinapala, the team is hoping to expand rapidly to reach Rs 10,000 crore disbursement within the next 3-5 years.
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