Bengaluru-based fintech start-up MoneyTap has launched an app-based credit line for consumers to get instant credit in a total of six taps on the app.
Bengaluru-based fintech start-up MoneyTap has launched an app-based credit line for consumers to get instant credit in a total of six taps on the app. Founded by serial entrepreneurs Bala Parthasarathy, Anuj Kacker and Kunal Varma, the start-up aims to target mid-income Indians.
“Our goal is to reach one million Indian consumers in the next three years,” said Bala Parthasarathy, CEO and co-founder, MoneyTap. Parthasarathy was earlier managing partner of seed-stage investment firm Prime Venture. Prime Venture has also invested an undisclosed amount in MoneyTap.
According to the company, MoneyTap is India’s first app to provide a credit line to consumers; such facility has been available only to businesses until now. Credit line means that the bank will issue loan up to a particular amount, without any collateral or charging any interest. With MoneyTap app, consumers can borrow as little as R3000 or as much as R5 lakh at low interest rates for flexible tenures.
The borrower repays it as EMIs within two months to three years at an interest rate of 1.25-1.5 % per month. The start-up promises to process credit application in a matter of minutes.
The start-up has launched the app in partnership with The RBL Bank. Harjeet Toor, head of cards, retail and MSME loans, and financial inclusion at RBL Bank, says that the partnership with MoneyTap will help the bank target segments that are otherwise difficult to access and help it widen the customer base by extending smaller loans.
Genesis of MoneyTap
Co-founder Varma says that MoneyTap is in response to lack of access to a credit line for minor exigencies. The options as of now in India are credit cards, which do not allow cash payments for day-to-day needs such as school fees, emergency expenses, rentals, sending money to family, etc. And applying for a personal unsecured loan is time-consuming for the consumer and expensive for the banks to process. Banks prefer giving big-ticket loans to fewer people who qualify or give loans against gold or assets, which most consumers are reluctant to pledge.
“The ubiquitous presence of smartphones and initiatives such as Aadhaar has made it possible for us to develop a truly powerful and disruptive financial instrument,” says Parthasarathy.
How it works
Customers willing to take a loan or credit have to apply via the patent-pending chatbot interface of MoneyTap app. The app then connects with the bank’s operating system to give an immediate confirmation based on individual credit history with real-time data from CIBIL. Whenever a consumer wants to use the credit amount, a one time set-up fees of R499-plus taxes is charged, which is paid to the bank. Customers can then transfer the credit amount to any bank’s savings account. A regular MasterCard-MoneyTap-RBL Credit Card is also provided to the user. Interest is charged only on the amount borrowed.
MoneyTap gets a percentage of the set-up fee and the interest charged by banks as its commission.
However, only salaried employees living in Delhi NCR, Mumbai, Bengaluru, Hyderabad and Chennai can get the credit line as of now. The company plans to expand its operations to 30 cities by March 2017. “We will also be partnering with a number of banks in order to achieve our goal,” says Parthasarathy.
The start-up plans to make the app available in multiple regional languages, including Hindi, soon.