piggy bank

Here’s another startup which is taking a stab at app-based lending. MoneyTap claims to be India’s first app-based credit line where consumers can borrow from partner banks on the app. To begin with, the app has partnered with RBL Bank where users can get a credit line of Rs 5 lakh from the bank without any collateral or interest.

Against this limit, using the MoneyTap app, consumers can borrow as little as Rs 3000 or as much as Rs 5 lakh and repay it through EMIs of 2 months to 3 years. Interest is paid only on the amount borrowed and the company says rates can be as low as 1.25% per month. The limit gets automatically replenished as soon 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.

MoneyTap’s app is available on Google Play but only caters to salaried employees living in Delhi NCR, Mumbai, Bangalore, Hyderabad and Chennai. Qualified customers, after completing the KYC, will pay a one-time Line setup fee of Rs 499 (plus tax) tax in their first month bill from RBL Bank.

Interestingly, app users get an RBL and MasterCard card with the sign up. Kunal Varma, co-founder told MediaNama that it is an open loop card which can be used as a regular credit card offline and online. Varma added that credit cards charge around 32% or even higher interest per annum for cash withdrawals while MoneyTap allows users to borrow at interest rates starting from 15% per annum.

MediaNama has also reached out to the company for details on how they evaluate a customer’s credit score

Note that ItzCash launched an open loop wallet in association with RBL Bank, which allows users to withdraw cash from ATMs. This card, however, is prepaid.

Competition

Mumbai-based fintech startup LoanTap also offers loans for salaried professionals. It raised $3 million in a series A round of funding. LoanTap is a Non-Banking Financial company that claims to offer loans without any EMIs.  It also provides personal loans up to Rs 10 lakhs on an EMI basis, and a personal overdraft facility on the basis of a customer’s CIBIL score. LoanTap also offers “Special Purpose” loans like “Advance Salary” loans, and long term loans for paying rental deposit charges.

Image credit: Flickr user Philip Brewer under  CCBY license.