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When Mahesh Shukla moved to Delhi from a small town in UP, he was disappointed to see how cumbersome and expensive it was to avail a credit card or personal loan. This in spite of him being in the banking sector, working for leading brands like Bank of America, DB, and Barclays.

“At the Corporate Banking Division at Barclays, I came across new fintech companies. These companies were trying to eliminate the need to physically go to the bank. But their efforts were confined only to payments, as they were unable to break into the lending space, even though they had all the tools to do a better job in lending than banks. Paytm had just exploded here in India. But they were also confined to payments at the time,” says Mahesh. 

Mahesh delved deep, and it led him to start PayMe India in 2016. The company is a full-stack digital lender in the personal loan space. 

In 2016, when it started, PayMe began with small ticket size advance salary loans. Now, with the company venturing into a ‘pay-later’ and affordable line of credit for MSMEs, it has evolved into a full-fledged personal loan company with its own NBFC license.  

Leveraging tech 

“I thought of leveraging the technology ecosystem established by the early fintech players by extending more offerings in the lending space,” says Mahesh. He started the company with his childhood friend Sandeep Singh, who passed away last year. 

“This has been the biggest setback for me personally as well as for the company. Only due to his initiative and hard work were we able to get this far. We now want to take PayMe to the next level to honour his memory,” notes Mahesh. 

When the duo started up, they knew that India is not only a capital-starved economy but also a credit squeezed society. 

Mahesh explains that people often fall into debt traps and fall victim to loan sharks due to the unstructured and unorganised nature of financing in small towns, and the absence of formal banking facilities.

“Hence, we came up with a digital solution that relied upon organically generated data to better understand the credit risk of customers with thin credit history. This model also enables us to lend across the country without the encumbrance of having a physical presence,” says Mahesh. 

Team and product

According to Mahesh, PayMe’s app-based model has enabled rapid scale. Today, the Noida-based company has over 100 employees.

Apart from Mahesh, the core team comprises Vineet Daniel, who has over 17 years of experience and has worked with the likes of Shine, Sendinblue, and LetsBuy; Vishal Gupta, who leads Tech; Gaurav Dwivedi, who heads Operations and Collections; and Manav Munjal, who heads Risk and Compliance. 

Explaining how the product works, Mahesh says, 

“Our platform is quite straightforward. Customers begin by downloading our mobile app and performing some basic steps to complete their KYC and provide us with their income proof, for example the bank statement. Our machine-driven credit models process the bank statement and other information quickly to provide an initial credit limit for which the customer is approved for. The customer can sign agreements with us digitally and avail of the loan instantly.” 

He adds that the COVID-19 pandemic has created a spike in credit costs and non-performing assets ratio on banks and financial institutions (FIs). This has been primarily led by rampant job losses, pay cuts, a steep liquidity crunch, and uncertainty. 

“Technology has definitely played a significant role in helping lenders adapt to the new normal by reimagining the product portfolio, building a digital spine, boosting digital financial inclusion and mitigating cybersecurity risks,” says Mahesh. 

According to him, the industry itself has experienced a drastic shift such as growing demand for digital lending channels, contactless lending, a major change in lending models and credit appraisals. It has also witnessed the growth of genuine borrowers.

The segment 

The consumer lending space is an area that has been severely hit by the pandemic. Issues with regard to lending rates, coercive methods in recovering loans, and non-consensual use of data are just a few instances.

In 2020, the Reserve Bank of India (RBI) issued notifications to Non-Banking Finance Corporations (NBFCs) and Banks mandating additional disclosures/compliances, and an advisory to borrowers warning them against fraud platforms. 

The Digital Lenders Association of India (DLAI) has also issued guidelines, with a regulatory pipeline on this front as well. Players like PayMe continue to thrive due to compliance with RBI guidelines.

PayMe India’s competition includes Pune-based EarlySalary, which had disbursed over 1.6 million loans until 2020, amounting to more than Rs 2,850 crore, and recorded more than 10 million app downloads. There also is Ahmedabad-based Creditt, which does short-term loans, and Bengaluru-based CashE. 

On what sets PayMe apart, Mahesh says, 

“We are a tech-first lending company. This is what sets us apart from our competitors. Everything from the app to the Loan Management System has been built in-house. This has allowed us to onboard partners and customers quickly and seamlessly. We earn most of our revenue through Processing Fees and the Interest Spread on our loan offerings,” says Mahesh. 

Future plans 

According to Mahesh, by the end of December 2020, the company had touched a revenue of $2 million. It has raised undisclosed funding from Singapore and Dubai-based angel investors. Additionally, the company has also secured credit lines from wholesale NBFCs for their lending purposes. The team has disbursed over Rs 750 crore in loans in the past three years. 

PayMe India now aims to be a full-fledged neobanking company with offerings ranging from a full suite of lending products, wealth management, debt advisory, and other loans. 

Mahesh says, “Presently our goal is to engage our customers at an early stage in their life when they first require financial services. Hence, we are focussing our efforts on students and young professionals who often face a cash crunch towards the end of the month. We have come up with a new product offering called ‘SALT’ just to solve this problem. SALT enables you to pay for a product or service at the time and allows you to pay for it later when you have cash in hand. This will be a game-changer for young people.”