Rejection rates are quite high in SME lending space: Manavjeet Singh

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Saurabh Gupta | 26 Feb, 2016
In an interview to SME Times, the Founder and CEO of Rubique.com, Manavjeet Singh has viewed that the risk appetite of every Financial Institutions (FIs) differs which is unknown to customer. Also many a time, a Small and Medium Enterprises (SME) owner does not even know how to present their documents to FIs. Therefore, the rejection rates are quite high in SME lending space.

"Having domain expertise from Banking, Rubique team helps SME customers approach the right set of Financial Institutions for their requirement. We also help customers in arranging the documentation required for the loan," he added.

Excerpts of the interview...

Please give an idea about your start-up. What exactly is Rubique.com?
Manavjeet Singh: Rubique is an online marketplace for financial products offering a wide range of loan products and end- to-end loan fulfillment to individuals and MSMEs.

Rubqiue has introduced a tech-led lending solution which is unique in terms of its matchmaking algorithm and direct integration with Financial Institutions' lending systems. With this technology solution, the model is focused on disbursement rather than mere lead generation allowing customer to get the best deal in the quickest possible time while lowering the cost for customer acquisition for the financial institution.

We have raised Series A funding led by Kalaari Capital with participation from Your Nest Angel Fund, Globvestor & Dexter Angel Circle in September, 2015.

Why Rubique.com?
Manavjeet Singh: We are different than online aggregator websites. We are very unique in terms of

A neutral platform where lender & borrowers can discover each other bringing transparency in the process
Matchmaking algorithm & Fulfillment engine which offers faster access to credit along with certainty
Wide range of products for individuals as well as small business owners which is not offered by any online model
Multichannel distribution tapping every consumer segment be it digital savvy or traditional customers

From your prospective, how you see the small and medium enterprise (SME) sector in India? How beneficial is Rubique.com for SMEs?
Manavjeet Singh: SME sector is backbone of Indian economy & they are exposed to greater opportunities for expansion and diversification across the sectors. Though there is lucrative growth in this sector, there is still funding gap which makes it a potential segment to focus on.

Rubique is a first ever portal to provide an online platform for one of crucial & faster growing segment SMEs (Small & Medium Enterprises). We saw that SMEs face serious challenges in raising finance from banks and financial institutions and are left at the mercy of local unorganized financiers charging interest of anywhere from 2% pm and above. We saw this as one reason SMEs aren't able to scale up and many face serious challenges in survival. Many SME units have either closed down or are struggling to remain afloat due to this. This is when we decided to investigate into the reasons why SMEs fail to smartly manage their business finance and capital syndication issue.

With our collective experience exceeding 500 man-years in Banking and Financial services space, we realized the root cause for this problem faced by SMEs and the cure. Nearly all key members of our management team worked as senior bankers with leading private sector and foreign banks. We knew the challenges of banking sector. While banks can reach out to their consumers by opening branches, banks fall short of proving intermediation and transaction advisory services. This is where we bring the support to advise businesses on how to borrow, from where to borrow, comparing offers from various Banks & FIs, and helping the client on documentation. However, how many highly experienced finance consultants can spend significant amount of time and energy for a SME client who wants to borrow a small amount of say Rs. 10 lakhs of working capital loans? Very few. But for Rubique, every customer is important.

How you work? Like how SMEs can take loan from you? What is the time and cost of getting your services? etc.
Manavjeet Singh: The risk appetite of every Financial Institutions differ which is unknown to customer. Also many a times, a customer does not even know how to present their documents to FIs. Therefore, in SME lending space the rejection rates are quite high. Having domain expertise from Banking, Rubique team helps SME customers approach the right set of Financial Institutions for their requirement. We also help customers in arranging the documentation required for the loan. To make the entire process even more smoother, we are working with the Financial Institutions automate the process as much as possible where the turn around time involved can be reduced from number of days to number of hours. We do not charge to customers.

What are your criteria of selecting a borrower that SMEs should fulfill?
Manavjeet Singh: We handhold the borrower throughout the process of borrowing guide him, and support him by offering following services:

a.       Documentation

b.       Guiding clients in preparing themselves for borrowing and how to get detailed project reports prepared

c.       Forward papers to bankers using our technology platform which is purged with bankers' systems

d.       Follow up with bankers

e.       Receive offers from bankers

f.        Provide those offers through our technology platform to borrower so that he can choose the best offer

How you market Rubique.com? And what do you think is the best marketing tool for a start-up company like you?
Manavjeet Singh: Rubique is an online marketplace for financial products offering a wide range of loan products and end- to-end loan fulfillment to individuals and MSMEs. Being an online marketplace, we would focus more on digital medium to market ourselves.

Indian government is emphasizing more and more on 'Start-up India'. How you see this move and how you see that are start-ups really getting the advantage of this movement or not?
Manavjeet Singh: Startup India Plan indeed created a lot of positivity & vibrancy in the Indian entrepreneurial clan. The initiatives set up of incubation centers, guidance on compliance at no fees or funds of fund is definitely going to address the dilemma of an entrepreneur in executing his idea. Making the registration a simple process through an app & portal along with the reduction of 80% fees will make first few steps of the startup much smoother than what it was. But the challenge is in implementation. But once it's implemented then I'm sure India will embark on journey to become "Land of Entrepreneurs".

No inspection for the first three years and self-certification for statutory compliance will help us to make our hire process much faster. Exemption of capital gains tax would help us focus more on the strengthening our foundations rather than worrying about the tax outflow. Even the faster patent process would help startups like us who is working on various innovative methodology/algorithms in financial services domain.

What is the present structure of your group? Like shape, size, presence etc.
Manavjeet Singh: Currently, we are present in 6 cities - Mumbai, Delhi, Kolkata, Pune, Bangalore & Hyderabad. In Bangalore, we have our technology hub. By next year, we will also tap 4 more cities. Currently the revenue is from the Financial Institutions whose offers we are facilitating to the customers. We do not charge customers at all. We have 75 employees. By March'16 end, we would be 100 employees across locations.

How you see Rubique.com in future? What are your future plans?
Manavjeet Singh: We strive to become the largest online marketplace for loans in near future. By next year, we plan to expand to four more cities. We will also be investing into the technology to keep sharpening our technology proposition to customers as well as FIs. We would like to establish ourselves as one of the few Fintech players changing the landscape of Indian lending space.