In an exclusive interview with SME Times, EarlySalary CEO & Co-founder Akshay Mehrotra said that the Indian credit market is most underpenetrated. Currently the two trillion rupees consumer lending market is set to grow to nearly 70 trillion rupees by FY2024, and 30% of this market will be fueled by unsecured lending.

Excerpts of the interview…

Please tell our readers about EarlySalary and its entrepreneurial journey.

Akshay Mehrotra: Five years back, we had a simple idea to democratizing credit and offer instant loans on a mobile app. With this motto, we started EarlySalary built an instant Salary Advance product in India. A new way for the young working professionals who could borrow on a mobile app changed; for the first time, someone could borrow in minutes without any physicality. We followed three core principles that hold even today; ability to borrow without justifying why, ability to pay back anytime and only pay for the amount and days borrowed for, and proper format digital automated journey. Today we have matured to offer a holistic product offering under the credit suite umbrella from Salary Advances to instant personal loans to buy-now-pay-later to the digital card for payments.

We have disbursed over a 1.8 million loans and become a preferred lending product to every young working Indian. We have built the highest-rated lending apps in the country and got acceptance from nearly 750+ partner corporates to introduce financial wellness to employees across the country and now work with hundreds of merchants across categories to build zero-cost EMI offers to customers bases.

Please tell what it offers?

Akshay Mehrotra: Within seconds of downloading the app, the platform sets up a credit line for the consumer and gives access to them. It allows you to get an instant loan or use the credit line to make payments using its RuPay card buy products on zero cost EMIs across merchants. Today EarlySalary, apart from lending on an app, provides seamless, integrated flows for millions of corporates employees to access salary advances and loans within employee portals. Similarly, EarlySalary SDKs powers Buy Now Pay Later functionalities across Education, HealthCare, Insurance, or ECommerce merchants allow their customers to buy more products and build affordability.

What is the current credit scenario in India?

Akshay Mehrotra: India is one of the most underpenetrated categories; currently the two trillion rupees consumer lending market is set to grow to nearly 70 trillion rupees by FY2024, and 30% of this market will be fueled by unsecured lending. As the Indian consumer gets access to affordable and accessible financing options, I see consumerism go up and an extensive base of mass Indian's using affordability powered by Fintech’s to fulfill their aspirations. Nearly 50% of the adult population is covered under credit bureaus, which indicates the market is ready for large lenders' growth in the coming years.

Do you think recent initiatives by Central Govt has improved credit scenario in India?

Akshay Mehrotra: Access to wholesales credit lines and lower cost of borrowing for lenders has always been a question mark; while lots of work has been initiated personally, I feel a lot more has to be done to get benefits to reach digital lenders who can grow faster or have access to more capital at lower costs to reach out to retail customers and SMEs.

What is your view on monetary policy of the RBI recently?

Akshay Mehrotra: The key to the growth of digital lending lies in adopting light-touch regulation and the effective implementation of the already proposed regulatory initiatives. The operationalizing and on-scale implementation of RBI’s proposed ‘Public Credit Registry’ (an extensive credit information database

accessible to all stakeholders) and the ‘Open Credit Enablement Network’ (an infrastructure protocol enabling low-cost digital lending to small borrowers through the access of consented data) would lead to increased participation of legitimate players and curb proliferation of unauthorized lenders.

Are Indian SMEs getting enough credit in India?

Akshay Mehrotra: A lot more things to be done to get credit to Indian SMEs especially the post-pandemic world; with small businesses majorly impacted, it’s the need of the hour. We have seen attempts with OCEN, Ease of doing business being offered to MSME by RBI, focusing on incentivizing credit flows and access to priority lending access to SMEs, etc.

Information is a crucial input that will help banks to make a credit decision. As borrowers have more information than lenders, it becomes a challenge for banks is to acquire information about the credit risk of the borrower. This problem needs to be addressed in allocating loans. The absence of a mechanism to bridge the information asymmetry between the borrower and the lender would lead to a failure to give loans efficiently.

Please tell our readers about your future.

Akshay Mehrotra: We want to build a larger organization and stand tall in every customer's mind, and heart with a product for every credit need; we are a profitable start-up and want to build a large financial model.

At EarlySalary, we have a razor-sharp focus; the first is the hyper-growth in customer base and build an AUM base by five times in the next 18 months and grow our new consumer focusing channels of Buy Now Pay Later. It will direct partnerships with employers and offering cards to our customer base. We want to make sure EarlySalary is a loved brand, a product offering that everyone can access.