The NBFC has planned to get closer to customers through WhatsApp chatbot:
Moneyboxx is bringing in a transformational change in the lives of underserved borrowers by providing them unsecured business loans of up to Rs0.3 million and secured loans up to Rs0.7 mn for purchasing income-generating assets and working capital purposes. Riding on the opportunities offered by the underserved market segment, Moneyboxx registered an increase in disbursement by 103.4% to Rs646 mn in Q2 FY23, compared to last year.
Deepak Aggarwal, Co-founder, updates: “We have provided business loans to underserved micro entrepreneurs in tier 3 and below places in essential and important segments such as livestock (67% of AUM), kirana (8%), trading (18%), micro manufacturers (6%), with cumulative disbursements of over Rs3.20 billion up to October’22. We are targeting AUM of Rs4 bn by March’23 from current AUM of Rs1.90 bn as of October’22.”
Doubling: Network, Customers
In 12 months ending September’22, Moneyboxx witnessed an increase in its customer base from 8249 to 16,122, registering a cumulative growth of 95.4%, and achieving 167% CAGR of over the last 3 years. Deepak attributes: “The growth has been majorly driven by doubling of our branch network and increased productivity per branch. We have transformed lives of more than 20,000 borrowers, of which 45% were women and 35% are new-to-credit customers. Customer sourcing up till now is offline, driven by inhouse sales team (no DSA).”
Co-lend, Strong Underwriting
To capitalize on the growth opportunity due to hugely unmet credit needs of borrowers in under Rs1 mn loan segment, the company launched secured lending product in Q1 FY23. It is riding on government of India and RBI rolling out various financial inclusion initiatives, including the roll-out of National Strategy of Financial Inclusion 2019-24, JanDhan basic banking accounts, and Pradhan Mantri Mudra Yojana. Secured lending has helped it increase maximum ticket size from Rs0.3 mn. Concentrated efforts on the part of banks are required in the areas of onward lending, co-lending with NBFCs to improve availability of credit to the lower stratum of the population, especially in rural areas. Deepak states: “We have started co-lending in partnership with 2 NBFCs to meet demand.”
While trading and manufacturing segments were affected by pandemic-induced lockdowns, company’s focus on essential sectors like livestock and kirana led to stable collections of over 96% during pandemic cycle. Business loan up to Rs1 mn is a hugely underserved segment. Deepak elaborates: “Our loan portfolio displayed strong resilience during the pandemic owing to strong underwriting standards and focus on essential segments (livestock, kirana). Robust asset quality with less than 1% GNPA and low write-offs is a testimony of our strong underwriting standards and collection efficiency. We foresee strong disbursement growth.”
LOS, Whatsapp Chatbot
Moneyboxx has been at the forefront in deploying technology to ensure it is able to provide credit in the most efficient and cost-effective manner. The company has completely digital onboarding process including e-signing of loan documents and entire disbursement happens through banking channels. Moneyboxx aims to reduce the cash collections. One of its core goals is to be as closely associated with the customer as possible. As an important step towards digitalization, it plans to implement BBPS (Bharat Bill Payment System) which offers integrated bill payment services to customers across all geographies with certainty, reliability, and safety of transactions.
The typical customer segment of Moneyboxx has limited business documentation and limited credit history. It follows a relationship-assisted, branch-led model for understanding borrower’s needs and credit underwriting, though it follows a fully digital approach (paperless) processes right from information gathering to assessment to disbursement and ongoing monitoring.
Deepak explains: “This is done through seamless parallel approval process. The entire process is online and efficient with fully integration to its loan origination system. WhatsApp chatbot is a planned product that will take us one step closer to this goal, where customer can check loan eligibility in just 3 simple steps with a TAT of less than 5 minutes.”
Underserved market offers huge growth potential. Moneyboxx has a proven and scalable business model and gained confidence of 22 lenders and raised equity of Rs690 mn thus far. With continuous support from lenders and plans of equity fund raise, it has certain plans to expand its footprint to significantly reduce its customer acquisition cost but will also help it connect with customers better and be readily available to meet their credit demands. Deepak reveals: “We want to expand to 60 branches and reach AUM of Rs4 bn by Mar’23 from current branch network of 50 across 6 states and AUM of Rs2 bn. We aim to reach AUM of Rs10 bn and 100+ branches by March’24.”