NeoGrowth Credit, a lending startup focused at SMEs has secured Rs 300 crore of equity funding from LeapFrog Investments, and existing investors like Aspada Investment Company and Quona Capital through Accion Frontier Inclusion Fund, reports The Economic Times. The report adds that as part of the investment, LeapFrog’s partner Michael Fernandes will join NeoGrowth’s board.
Started in 2013, NeoGrowth is a NBFC company, which provides loans to merchants who accept card payments or digital payments. The company analyzes turnover data from a merchant’s point-of-sales terminal to find creditworthiness of the company, and claims that it disburses loans in three days. As per the company’s website, NeoGrowth has its presence in Mumbai, Bangalore, Delhi, Chennai, Coimbatore, Pune, Kolkata, Hyderabad, Jaipur, Chandigarh, Ahmedabad, Lucknow, Ludhiana, Surat, Mysore, Madurai, Nagpur, Indore, Vadodara, Vijayawada & Vizag and plans to expand to other markets in India shortly. Till date, it claims to have partnered with 7000 business merchants.
The company has been promoted by Dhruv Khaitan (DK) & Piyush Khaitan (PK) and is backed by Omidyar Network, Aspada Investment Company, Khosla Impact, Accion Frontier Inclusion Fund (AFIF) – Mauritius and IIFL Seed Ventures Fund I.
A bunch of technology platform has joined the lending space off lately. NeoGrowth competes with companies like Paytm-backed CreditMate, CASHe, LendingKart, MoneyTap, EasySalry, Faircent, LoanMeet amongst others.
RBI guidelines on P2P lending
Note that, the Reserve Bank of India (RBI) had come out with final guidelines in October for peer-to-peer (P2P) lending platforms, according to which P2P lending companies will be regulated as non-banking finance companies (NBFCs) and will come under the purview of the RBI.
According to the guidelines, the P2P platforms will act as only as an online intermediary and not raise deposits. These platforms will only act as a facilitator between different parties, and cannot provide any credit enhancement or credit guarantee. The RBI also directs that these companies cannot cross-sell other any product except for loan specific insurance products, and are not permitted international flow of funds. Also, the P2P lending platforms are supposed to undertake due diligence on the participants including credit assessment and risk profiling of the borrowers and disclose the same to their prospective lenders. They will also have to take prior and explicit consent of participants to access their credit information. The guidelines add that, the platforms will have to provide assistance in disbursement and repayments of loan amount and render services for recovery of loans originated on the platform.