India minted a total of 42 unicorns in 2021. While 12 were from the fintech segment, just two of them are in the business of lending. OfBusiness, a raw material marketplace and credit provider to small and medium enterprises (SMEs) in the manufacturing and infrastructure sector, turned unicorn in June turned unicorn in June Economic Times OfBusiness turns unicorn post SoftBank-led $160 million funding Read more . And Slice, a pay-later card provider, bagged the status after in November.
The billion-dollar valuation, usually considered a proxy for future growth expectations, has stayed elusive for a majority of India’s new lending-focussed fintech firms. Over the last few years, there has been a mini-explosion of digital lending startups—traditional short-term lending, Buy Now Pay Later Buy Now Pay Later The Ken Simpl, LazyPay and the future of Buy Now Pay Later in India Read more (BNPL) and peer-to-peer lending peer-to-peer lending The Ken Putting the P back in P2P lending Read more —in the country.
Digital lending volumes have also grown rapidly. Between 2017 and 2020, the volume of such loans has grown 12X, standing at Rs 1,41,821 crore ($18.7 billion) in 2020, according to a November report report Reserve Bank of India Report of the Working Group on Digital Lending including Lending through Online Platforms and Mobile Apps Read more published by a working group on digital lending. The working group is part of India’s central bank and regulator, the Reserve Bank of India (RBI).
Lending is a high-margin business in financial services and one of the few sure-shot ways of making money in the sector. “India is a country of 25-30 million good borrowers,” a financial services analyst at a global investment firm tells The Ken. The analyst and others quoted in the story requested anonymity as they aren’t authorised to speak to the media.
It’s also cash-rich. According to data tracker Tracxn, digital lending startups such as Capital Float, MoneyTap, KreditBee, and Lendingkart, and BNPL providers Simpl and ZestMoney, have raised a total of $884 million over the last five to six years. Capital Float and Lendingkart were valued at $350 million and $240 million, respectively, in April and May 2020, according to Tracxn data.