Profile Feature : Credy Champion Sourav!

My Story

Sourav

Journey before Credy:  

I was trying to gain admission in post-graduation when I got my first job in a payments start-up based out of Mumbai. Where I learnt how a server-client architecture works outside of university textbooks. Even though I was working on the Android app I was very interested in the backend side and never missed any opportunities to learn as much as possible. Then I picked up understanding in UI/UX, a little bit of designs. I learnt a lot of building and deploying Android apps and was eager to learn things like redis, nodejs given that we were using those to build our backend.

Later I moved to a mobile security start-up based out of Bangalore as I was getting an opportunity to work as a Backend engineer with a very small and smart tech team. This is where I started learning backend integrations, building APIs, adding to the existing architecture. Given the people in the team were really connected with different start-up, developer communities this is where I also got to meet different people and know a lot of different things about start-up’s outside development as well. 

Unfortunately, all good stories come to an end and I had to leave for my hometown because of some personal reasons for a few months. The next one year I tried working remotely as well as in some other companies however I was disappointed mostly with the quality of work I was doing and hence decided to look for something better.  This is when I came in contact with Harshit, and eventually, Credy happened 🙂

Journey/Experience in Credy:  

I joined Credy right at its beginning thinking, this might be a place of learning and I was absolutely right. I have seen it growing from zero to the level it is today. The environment here is always very encouraging and I have learnt so many new things which I did not experience earlier professionally. The thing which I liked most in my peers is the motivation level they have. From the founders to the interns I have learnt so much from everyone and hope this continues.

Learning in Credy:  

I have learnt so many new technical things, listing down few of them:

         We had to integrate with a lot of services and other organizations which were not very tech focussed. These integrations had a lot of undocumented things, unexpected behaviours and ambiguity. Understanding and correctly estimating these problems can only be done after experiencing these difficulties multiple times. While addressing these problems, my understanding has improved in authenticating HTTP requests with certificates, understanding the signing of certificates, expected data structures, etc.

         Apart from this I gained good knowledge in infrastructure related work and trying to automate things at as many levels as possible.

         Our attempts to keep the code structure clean and easy to understand has improved my ability to write better code immensely.

         Being a financial company, we faced issues in handling a large amount of data and structuring them, at the initial stage. To solve that we started with very simple relational structure and tried to improve that at different points in time, this has given me a bigger picture of database architecting.

While most of my learning is on the technical side increasing my knowledge I have learnt a lot about the finance domain outside development as well.

 

 

Profile Feature : Credy Champion Soumya!

My Story

Soumya 2

Journey before Credy:  

I started my career in finance by joining a leading Indian bank as a Credit Manager. Being new to the retail lending world, my first job gave me a solid foundation in understanding the retail lending process apart from helping me develop the basic soft skills which are equally important in the corporate world.

 Journey/Experience in Credy:  

I came across an interesting article about Credy on TechCrunch and was curious to know their working model and most importantly the collaboration with Y Combinator. I decided to drop an email to Harshit to enquire about a possible opportunity and as they say, the rest is history 🙂

I have been with Credy for the last 9 months and the journey so far has been phenomenal. The best part about working with Credy is the flexible & friendly work environment it offers. My co-workers are very friendly and are always there to help me out whenever required. There is an open channel of communication between the employees and the CEO, COO & CTO of the company and your suggestions will never go unheard.

Credy focuses on getting the work done on time rather than stressing on the number of hours physically spent in the office. This has helped me strike a good work-life balance and enabled me to pursue my personal hobbies as well.

Learning curve in Credy/Things you learnt working at Credy:  

Coming from a non-technical background, while building some of Credy’s fin-tech products, I have had to don the hat of a Product Manager right from product ideation phase until launch which has helped me learn the technical aspects of product development. By taking ownership of tasks outside my comfort level, I’ve been able to develop my problem-solving skills, creative skills, and organisational skills.

Another thing that has been exciting in my daily job at Credy is learning to use new reports, tools and data models to determine creditworthiness and financials of individuals. Insights from credit report agencies and fraud detection tools have helped simplify and expedite the decision-making process.

I was fortunate enough to see my ideas become a reality when Credy’s in-house LMS engine was designed for transforming the underwriting process. This, in turn, helped me look at the loan approval system at a macroscopic level. I’ve also taken additional responsibilities such as being the Content Manager for Credy’s weekly e-newsletters, helping the development team with UAT prior to a new product going live.

Credy has been the place where I could learn and understand the product development from scratch and my opinion and suggestions were always valued.

 

 

6 Practical Tips When Taking Personal Loans

Personal loans are a quick way to get money for a short-duration financial need. You can use it for refinancing a large credit card bill, paying for a medical emergency or to pay for lumpy expenses like children’s school fees. While personal loans provide a convenient way to convert large expenses into easy EMIs, there are some important things to keep in mind.

Based on our experience of servicing and interacting with thousands of customers applying for personal loans at Credy, we have compiled these 6 practical tips to keep in mind when taking personal loans. It will help you save money, improve your credit score and satisfy your financial requirement without causing stress.

1. Know the Need

Personal loans are easy to manage when there is a specific expense that the money is used for. The expense can be for various needs – consolidating different loans & credit card dues, family occasions, medical emergency, lifestyle expenses like travel and so on.

Having a specific expense in mind has the following benefits:

  • One-time nature: you know that the important family occasion won’t come again for some time or that the medical emergency was an exception. This allows you to pay back the EMIs with your monthly disposable income once the expense is taken care of.
  • Knowing the loan terms: when you know the need, you know how much amount you need and for how long. If your credit card bill is Rs 40,000 and you want to convert that into EMIs via a personal loan, you know the loan amount should be Rs 40,000.

Customers who do not have a specific need in mind when taking a personal loan eventually end up

  • Confusing loans with income – a personal loan is not a source of income. You have to pay it back, with interest. Taking a personal loan repeatedly because your monthly expenses are more than your monthly income is eventually going to lead to large interest expenses, delays and eventually a poor credit score.

2. Choose the Right Lender

There are many loan options – banks, NBFCs, online lenders, informal money lenders and so on. Not all are same, and not all would offer what your unique circumstances require. Identify your priorities – is it getting the money quickly? Is it having flexibility in loan terms and repayment options? Or is it saving interest cost? Here are some useful guidelines:

  • Speed: If you need fast loans, you should pick lenders who have an online process. Online process doesn’t just mean having a website application. Check what their KYC process is, check how they take documents and signatures on documents etc. The speed that an online process gives, a paperwork-heavy and manual process will never be able to give.
  • Interest Rates: You should evaluate for yourself if interest rates are a major concern for you. Small ticket personal loans are generally less sensitive to interest rates. For e.g. if two personal loan options have 3% difference in interest rates, total interest paid on a Rs 50,000 6 month loan would be different by less than Rs 500!
  • Customer Support & Transparent Process,: This is probably the most important. A lot of lenders have hidden terms, undisclosed steps and third-party dependencies. The last thing you want in case of an urgent need is the lender telling you the process is stuck in some other department and no one can help. Rest all being the same, go with lenders who have an easy process and helpful customer support.

Based on your needs, you may prefer a lender who is fast and gives good service than a slower option with long opaque processes.

3. DON’T Overborrow

Customer support: But sir, why do you want just Rs 50,000? Your loan is approved for Rs 2,00,000

Me: Umm.. because I have to pay interest?

This actually happened when I got a call from a loan company after I checked out their website. Loan companies will always want to give you a loan higher than your need. For them its simple economics – their processing costs are almost the same whether the loan is Rs 50,000 or Rs 2,00,000. So why not give the customer higher amount and earn more?

As a customer, you have to make sure you borrow only the shortfall you have. Only the amount that you are lacking. This requires discipline, just as most financial best practices do.

Another way a lot of our applicants end up overborrowing is trying to pay off one loan with the other. DON’T do that. You will end up churning loans and enter a debt trap. Borrow what you need. Anything more is giving your hard-earned money for free to lenders. At Credy, when we reject such applications, we advise customers to avoid getting into a debt trap.

4. Ask For Detailed Loan Terms

Loan terms are not always very clearly communicated by the lender. You should ask for a one-pager of loan terms that covers things like

  • Processing fees & interest rates
  • Late fee structure
  • Prepayment fee and eligibility
  • Loan recall clause
  • Cheque bounce charges
  • Legal charges

You should calculate the amount of total late fees that you will have to pay if you are 1 month late. Make sure late fees and lender’s terms are reasonable and not like that of a “loan shark”.

5. Protect your Sensitive Data

A lender has access to a lot of your sensitive data. Make sure to ask them why they require that data and how securely is it stored. Here are some guidelines

  • Use trusted websites: If you are going for an online loan, check the content on the website, contact information and details of the company management. Make sure that the website URL has https:// and a green address bar like this:

Screen Shot 2017-11-21 at 9.52.27 AM

  • Ask what your information is going to be used for: Not knowing how your data is going to be used can be risky for you. For e.g. sharing information like Aadhaar, PAN, credit card numbers etc. for no good reason is unadvisable. Some websites forward your leads to other companies without informing you. When those companies make a query on your credit score via your PAN, your score goes down. And you don’t know how many hits will happen!
  • Protect your Aadhaar:
    • When giving your Aadhaar details to a company check if they are licensed to verify your Aadhaar number. For e.g. Credy has implemented controls around Aadhaar data to be compliant with UIDAI and Govt. of India guidelines and is licensed with Khosla Labs to verify customers’ identity via Aadhaar.
    • Never store your Aadhaar number on your mobile phone. Remember: Aadhaar Number + Mobile OTP = Your Signature So if you lose your phone, and it has your Aadhaar number on it, someone can pose as you and sign a document or do KYC as you.

6. Repay on Time & To The Right Party!

This sounds obvious but sometimes is hard to implement. If you are facing financial troubles and don’t have the money to pay the personal loan EMI, you can do two things

  • Cut down any extra costs. Look closely at your expenses – there must be some expense that is avoidable at this point in time.
  • Borrow from friends just for the EMI payment. Don’t go for an additional loan. Borrowing EMI amount from friends and paying ensures that your credit score is not affected. A bad credit score will ruin your chances of getting loans in future and cause considerable stress and cost in arranging finances from alternative sources.

Be careful to ensure you make repayments to the right party. Be extra careful when making cash payments. We had a customer who was paying his EMIs regularly in cash to a bank agent. Later he found out that the agent was not depositing the cash on time and using it for his own expenses! The customer’s credit history got permanently damaged because of that.

Make sure of the following when paying by cash:

  • Check for some company identification of the collection agent
  • Ask for a payment receipt/email to be sent after you make the payment. If the receipt is not received within 48 hrs, escalate the issue.

Take care of above to a get a good deal on your personal loan without affecting your long-term creditworthiness.

Let us know in comments if these tips were helpful!


Harshit S Vaishnav
COO & Head of Credit,
Credy

Credy is a Bangalore based online platform that provides fast online loans for multiple requirements like credit card refinancing, education expenses, medical emergencies etc. We aim to be a trusted and responsible lender, and believe that educating the customers about best practices is important.

NBFCs : The present scenario (Part I)

In the present economic system of India, NBFCs (Non-Banking Financial Companies) have assumed a significant role in providing accessible and affordable financial services. We will be covering NBFCs in a series of articles. This article (Part I) will focus on the present status of NBFCs in India and try to understand how they have become a vital player in financial inclusion.

As per the RBI, an NBFC is a company registered under the Companies Act, 1956 engaged in the business of loans and advances, acquisition of shares, stocks, bonds, debentures or securities issued by Government or local authority or other marketable securities.

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Source: RBI

With the focus of Non-Banking Finance Companies on segments neglected by banks (non-salaried professionals, individuals, traders, transporters and stock brokers), and with the ongoing stress in the public-sector banks due to mounting bad debt, NBFCs have had a lucrative opportunity to expand their presence in the Indian financial story. The RBI, in line with the growing importance of NBFCs, has a separate Department of Non-Banking Supervision, the vision of which is “to have a strong, robust and vibrant NBFC sector, complementing the banking sector”. As per an MCA report (March’14), 36,347 NBFCs exist in India. Out of these, 11,682 (32.14%) were registered with RBI as of Mar ’16. Here are some key data points related to NBFCs –

  • The aggregate balance sheet size of the NBFCs sector expanded by 14.5% during 2016-17 as compared to 15.5% during 2015-16.
  • Loans and advances increased by 16.4% and investments increased by 11.9% in March 2017, YoY
  • Whereas the banking sector has had an average NPA of around 10% in 2016-17, NBFCs have done a better job of managing risk by capping the sector’s NPAs at around 4.5%
  • Overall, NBFCs were on their way to setting a record of a robust growth of 19–22% CAGR in retail credit to reach an AUM of approximately 6.044 trillion INR by March 2017.
  • NBFCs have contributed to growth consistently over the past decade. For example, the contribution of NBFCs to commercial banking assets increased from 8.4% in 2006 to 14%+ in March 2015. Similarly, NBFC sector on an average witnessed a CAGR (Compound annual growth rate) 22% during the period between Mar ’06 and Mar ’13, with NBFCs growing faster than banking sector in most of the years
  • It was surprising to note that NBFC sector clocked a growth of 25.7% in 2011-12 although GDP growth decelerated to 6.3% in 2011-12 from 10.5% in 2010-11 (counter-cyclical movements)
  • Similar to the trend in recent years, over an extended period of time, NBFC credit grew more rapidly as compared to the banking sector – NBFC credit witnessed a CAGR of 24.3% during the period between Mar’07 and Mar’13 as against 21.4% by the banking sector.
  • Infrastructure Financing: The quantum of infrastructure finance provided by the NBFC sector witnessed a CAGR of 26.2% during the period between Mar’10 and Mar’13. In absolute terms, NBFC finance to infrastructure increased from Rs.2228 billion to Rs. 4479 billion in the mentioned period. NBFC finance to infrastructure accounted for 35.8% of their assets as of March 31, 2013, while in the case of banks it was a mere 7.6%.
  • Loans Against Property: Low turnaround time and easier documentation has allowed NBFCs to invest assets in multiple segments, especially small-scale industries and MSMEs. According to a recent CRISIL report, loan against property segment for SMEs is expected to grow by Rs. 5 lakh crore by 2018-19 and NBFCs are expected to contribute nearly half of this.
  • Market Perspective: has also been bullish. “Incrementally, in recent times, investors are allocating more to NBFCs, as compared to banks. Off late, NBFCs have outperformed banks,” said Gautam Chhaochharia, head of research at UBS Securities India Pvt. Ltd.

The success of NBFCs can be clearly attributed to their better product lines, lower cost, wider and effective reach, strong risk management capabilities to check and control bad debts, with a better understanding of their customer segments. Recent reforms have been on the lines of ‘rationalization’, i.e. stricter rules for NBFCs that have a significant impact on the economy to keep the negative effects of Shadow Banking in check, while providing certain easy passes to NBFCs that don’t systematically impact the Indian economy, thereby allowing them to solve real problems without the possibility of any major threat to the economic operations.

The next series of article on NBFCs will highlight upon the drawbacks that NBFCs are facing. Credy is actively partnering with NBFCs and helping improve lending processes through automated borrower sourcing, profiling, authentication, agreement signing, repayment management, legal processing etc. Automating processes to every extent possible and building better credit underwriting algorithms to increase accuracy and speed are critical for a healthy credit business.


Abhishek Ranjan is a Research and Policy Analyst to Members of Parliament (MPs) Mr. Ninong Ering and Mr. Dilip Tirkey. He is also working as a Consultant to DTSRDF and University of Chicago’s Delhi Center for Anubhav Lecture Series and is a Policy Consultant for FinTech start-up Credy. Earlier, he was a LAMP Fellow and graduated in Engineering from Manipal Institute of Technology.

The mechanics behind RBI rate cut

RBI announced a Repo rate cut by 25bps. The Repo Rate was reduced from 6.25% to 6% after the Monetary Policy Committee of RBI meeting, as was widely speculated before the meeting. In this post, we will try and understand the reasons behind the rate cut. To understand the reasoning, it is essential to know the relation between inflation and repo rate.

Repo rate is used by RBI to influence the short term money supply in the economy. It is the (fixed) interest rate at which the Reserve Bank provides overnight liquidity to banks. RBI uses the Repo rate as a lever to influence inflation in the country.

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Inflation and Repo Rate (Source)

Inflation is a lagging indicator in response to the repo rate changes. The inflation rate typically reacts inversely changes in the repo rate.

If the inflation rate is higher than the limits targeted by  RBI, the RBI looks to increase the repo rate so as to encourage banks to increase the lending rates/savings rate for its customers. This, in turn, encourages the customers to consume less and save more. Similarly, when the prices are stable over time, RBI sometimes decreases repo rate to encourage private investments and thus help in increase in growth rate of GDP.

Since 2016, RBI has embraced inflation targeting as an official policy, in collaboration with Ministry of Finance. The RBI and the Government, have decided the inflation target between 5th August 2016 to March 31, 2021, 4% with an upper and lower limit of 6% and 2% respectively. In fact, the Monetary Policy Committee would be entrusted with the task of fixing the benchmark policy rate (repo rate) required to contain inflation within the specified target level.

India has been going through a period of historically low inflation. The latest CPI numbers released for June 2017 show that YOY inflation went to 1.54%, much below the target lower rate of 2%. Prices of food and beverages have been under deflation since May 2017, with YoY growth going to -1.1% in June. It is worth noting that the infamously expensive pulses have gone back to their price levels of June 2015, after recording a massive drop of 22% YoY.

While disinflation has been observed over the past few month, it is not clear if it transitory or structural. A reduction in repo rate would lead to increase in prices, and RBI assesses risks of steep price rise, as well. However, with the reducing inflation trend observed in various commodities and a strong monsoon season this year, the RBI had room to reduce the Repo rate.


This article is written by Vishu Agarwal. He is a policy enthusiast who follows India’s economic and monetary policies very closely.

m-Aadhaar: The Paradigm Shift

 

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UIDAI, which is the authority established to issue Aadhaar numbers, has launched the m-Aadhaar app for mobile users that will allow users to carry unique identification profile on mobile. Users can download their Aadhaar number profile on their Android smartphones and will therefore not require hard copies of the card, wherever applicable.

It allows the user to carry their Aadhaar demographic information, i.e. name, date of birth, gender, address and the photograph linked with their Aadhaar number, on their smartphones.

In one shot UIDAI has addressed a lot of privacy concerns regarding Aadhaar. Now people don’t need to store their Aadhaar number unprotected on their devices, as the m-Aadhaar app comes with a password protection. It is not advisable to store your Aadhaar number without password protection on your mobile anyway. Also, you can conveniently lock your biometrics from your smartphone, which will give a lot of comfort to people who are worried about their biometric information being abused.

Aadhaar based e-KYC had a challenge, which many of us have faced, that the OTP SMS gets delayed by the order of minutes regularly, and for hours on occasions. Given the millions of OTPs which UIDAI serves every day, this is understandable. Now that problem is solved by the TOTP feature on the application, instead of waiting for the OTP SMS to arrive, you can just go to the application and get the TOTP and use it for e-KYC purposes.

Even with the push of Government and the digital nature of Aadhaar, people were using Aadhaar with its hard copy all the time. Now, with the m-Aadhaar application, Aadhaar has truly gone digital. Gone would be the days when people carry hard copies of their identity and address proofs.

As the smartphone penetration is all time high, with the numbers nearly reaching 400 million and an equal number becoming literate digitally; this will increase the feasibility and adaptability of Aadhaar platform. Especially in the context of the last 8 months, the acceptability of smartphone as a gateway for digital payments has opened the scope further. Now with the launch of m-Aadhaar, the services now offered will suit to the demand of the customers. These services can be directly accessed via their 12 digit Aadhaar number on just a single tap of their smartphone. We are heading towards an India where all services can be assessed and granted with a single tap.


Abhishek Ranjan is a Research and Policy Analyst to Members of Parliament (MPs) Mr. Ninong Ering and Mr. Dilip Tirkey. He is also working as a Consultant to DTSRDF and University of Chicago’s Delhi Center for Anubhav Lecture Series and is a Policy Consultant for FinTech startup Credy. Earlier, he was a LAMP Fellow and graduated in Engineering from Manipal Institute of Technology.

GST and financial services

On 1st July 2017, Hon’ble Prime Minister launched GST (Goods and Services Tax) from the Parliament of India. He lauded it as the step for the economic integration of India. This single tax reform is a new hope for our energized and growing economy. GST is about the vertical and horizontal integration of all indirect taxes in India. It will have long reaching impacts on the access to financial services which have been analyzed further.

Tax on financial services transactions such as banking transactions (credit card payments, fund transfer, ATM transactions, processing fees on loans etc.), mutual funds, insurance and the stock market has increased from the previous 15% to 18%, making them marginally costlier. It would have an inflationary impact in the near future. But many experts are hopeful that the increase in cost may not last in the long run as banks will pass on the benefit of input tax credit, under GST, to their customers. 

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Ninety percent of the products in the service sector were placed in the 18% bracket, which is a marginal increase but is expected to reduce complexity in the transaction and improve ease in availing of input credit. Out of all services, 63 have been put on a negative list, which is exempt from tax.

Mutual fund distributors earning up to Rs. 20 lakh will remain exempt from GST, while those earning more will see their tax rate increased from 15% to 18%. The hike from 15% to 18% will apply to the insurance sector as well.

In stock trading, the brokerage would have increased taxes. Depending on the volume of trades, the brokerage can be a maximum of 1% for a transaction value of Rs10,000.

As per Vinod Kothari Consultants, on the matter of loans coming under GST, they say that the definition of goods and supply under sections 2(52) and 2(102) of the CGST Act, exclude money to money transactions. Loan transactions being money to money transactions are therefore not subject to GST.

Further, the GST Council has also exempted money to money transactions in the Schedule of GST rates for services Entry 8 of the list of exempted services states. Therefore, interest charged on loan transactions shall not be subject to GST.

To conclude, with the arrival of GST, financial services transactions have become dearer but in the long run service providers will pass the benefits to consumers. We must embrace GST era with positive spirits!


Abhishek Ranjan is a Research and Policy Analyst to Members of Parliament (MPs) Mr. Ninong Ering and Mr. Dilip Tirkey. He is also working as a Consultant to DTSRDF and University of Chicago’s Delhi Center for Anubhav Lecture Series and is a Policy Consultant for FinTech startup Credy. Earlier, he was a LAMP Fellow and graduated in Engineering from Manipal Institute of Technology.