Online lending startup MoneyTap has raised $9 million in Series A funding led by Sequoia India, New Enterprise Associates (NEA) and Prime Venture Partners. The company offers a credit line of Rs 5 lakh to salaried professionals without any collateral. It has partnered with RBI Bank to offer the credit line but the company says that it will be partnering with six other Banks and NBFCs. MoneyTap also plans to expand to 50 cities by the end of 2017.

MoneyTap is different from other lending startups in that customers will be able to borrow against the credit line. Customers do not pay interest on the credit line amount but instead can borrow smaller amounts, say Rs 3,000, and pay interest only on the amount. The company says rates can be as low as 1.25% per month. The limit gets automatically replenished as soon as EMIs are paid back. All actions are initiated on the app, but all financial transactions such as billing, repayment or withdrawals will directly be with the bank using secure APIs.

Qualified customers, after completing the KYC, will pay a one-time setup fee of Rs 499 (plus tax) tax in the first month’s bill from RBL Bank. MoneyTap says it evaluates the user’s eligibility in less than 4 minutes after which it decides on the customer’s application the credit line amount they are eligible for. Users also get an RBL and MasterCard card with the sign-up. Kunal Varma, co-founder told MediaNama earlier that it is an open loop card which can be used as a regular credit card offline and online.

Note that MoneyTap’s co-founders include Bala Parthasarthy,  co-founder for Prime Venture Partners. In 2007, he volunteered for UIDAI under Nandan Nilekani.

Credit profiling

The Economic Times says that the fresh funds will be used to boost its technology and incorporate IndiaStack features such as the UPI and e-sign. It also added that it will be strengthening its credit scoring mechanism using alternative data.

Building a credit score with alternate data is in vogue at the moment. Interestingly, iSpirt which developed the IndiaStack, said that it wants to build credit profiles using UPI and BHIM transactions to assess credit-worthiness of potential borrowers. iSpirt co-founder Sharad Sharma said that iSPIRT was working on such a cash-flow based lending model.

Meanwhile, competitior EarlySalary has developed its own underwriting system which is a self-learning Algo-based decision system based on 800 data points. It reviews a customer’s social media and credit bureau data to approve a loan for them. Goyal said that its app asks customers to sign in with their Facebook credentials and also asks for PAN card information, a month’s bank statement and details on where a person works.

Competition

– EarlySalary, a company which offers salary advances and instant cash loans, raised $4 million in funding from IDG Ventures India and Dewan Housing Finance Corp (DHFL) in May.

– Ezcred raised Rs 6.5 crore in a seed round of funding from various investors including Dheeraj Pandey, CEO Nutanix; Rajesh Yohannan, former managing director at Citibank; and Akash Garg, director of engineering at Uber.

– Paysense raised $5.3million in series A from Jungle Ventures. It had earlier in 2015, it raised $2.3 million from Nexus Venture partners.

– Lending platform for salaried professionals, LoanTap raised $ 3 million in a Series A round of funding from HNIs including Abhishek Pandey and Jaysukh Sapra, in August last year.