Lending platform Credy is looking to change the way people gain access to personal loans in India. The company, which is currently a part of Y Combinator’s Winter 2017 batch, is digitizing the process and improving access to capital for residents by opening up peer-to-peer loans to a wider group of borrowers and lenders.
Credy is riding the wave of a few major reforms in India that will make it easier to identify applicants, determine their creditworthiness and increase digital banking. The first was the establishment and adoption of the Aadhaar ID system, which is the world’s largest biometric ID system with more than a billion Indian residents enrolled.
The second major change was India’s demonetization plan, which was enacted late last year and took more than 85 percent of the country’s currency out of circulation. While there are still questions about the effectiveness or implementation of the plan, it is undoubtedly moving India from a cash-based society to one that relies on digital banking and money transfer.
With all that in mind, Credy has emerged to improve personal lending in a market that is worth $50 billion and is growing at a 30 percent rate. That might sound like a huge opportunity, but it could be even bigger — according to co-founder and CEO Pratish Gandhi, only one in seven India residents currently have access to credit.
The team at Credy believes it can expand that number dramatically with an application process that is entirely digital and linked to a user’s digital ID. Unlike the current lending system, which relies heavily on paperwork and can take several days or weeks to process, Credy can give instant approval on a loan after the applicant provides some initial information.
Once they’ve been approved, borrowers are asked to send documents to be verified. And after that is done, Credy allows borrowers to sign the loan agreement digitally and they get access to a personal loan. The average loan size varies from $500 to $1,000, with repayment times of six to nine months.
Credy doesn’t lend money itself, but acts as a marketplace connecting lenders (who are mostly high-net-worth individuals) with borrowers they’ve approved. The company was founded by former Goldman Sachs employees who worked in risk management, and are applying that learning to the consumer lending market.
The company has processed approximately $3 million of loans to date, and that’s just in the city of Bangalore. With some backing from Y Combinator and the establishment of a banking partner to facilitate money transfers, Credy expects to be able to scale up more quickly in the coming months.