Paytm’s parent company, One97 Communications, is among the nine stocks newly incorporated into the MSCI Global Standard Index. Following its inclusion, One97 Communications observed its shares reaching the highest level this month.

Paytm shares are presently trading at INR 912.30, reflecting a 2% increase. The stock has registered a remarkable 72% gain in the year 2023.

IIFL Alternative Research estimates potential stock inflows at $140 Mn, while Nuvama Alternative and Quantitative Research anticipates inflows of $162 Mn.

Recently, Paytm announced a 49% year-on-year decrease in its consolidated net loss, amounting to INR 291.7 Cr for the quarter ending September 2023. Operating revenue experienced a significant 31% surge, reaching INR 2,518.6 Cr, propelled by robust expansion in the payments and financial services sector.

Meanwhile, shares of Paytm slumped as much as 10.6% to INR 882.1 during the intraday trading on the BSE on October 23 after the company released its Q2 FY24 earnings.

In addition to Paytm, IndusInd Bank, Tata Motors ‘A’ (Tata Motors DVR), and Suzlon Energy shares are also among the nine stocks included in the MSCI Global Standard Index.

As per the latest announcement by the global index provider, other stocks added to the MSCI India Index include APL Apollo Tubes, Macrotech Developers, Persistent Systems, Polycab India, and Tata Communications.

The changes in constituents for the MSCI Global Standard Indexes will take place at the close of November 30, 2023.

At the same time, MSCI has not removed any stocks from the India index.

Passive funds globally monitor the Morgan Stanley Capital International (MSCI) indices. Any additions or upward adjustments in stock weightages within these global benchmarks are likely to attract inflows from passive funds aligned with these indexes.

Morgan Stanley Capital International or MSCI is known for its stock indices. The MSCI Index includes stocks from developed markets worldwide, as defined by MSCI. It covers securities from 23 countries but excludes stocks from emerging and frontier economies, making its global scope somewhat narrower. In contrast, the MSCI All Country World Index (ACWI) incorporates both developed and emerging nations. Additionally, MSCI offers a Frontier Markets index, which includes another 31 markets.

The MSCI India Index is crafted to gauge the performance of the large and mid-cap segments within the Indian market. Encompassing 122 constituents, the index effectively spans about 85% of the entire Indian equity universe.

The post Vijay Shekhar Sharma-Led Paytm Makes Into MSCI Index appeared first on Inc42 Media.

After raising $50 Mn in its Series C funding round led by Tiger Global in June 2022, lending tech unicorn slice has now secured INR 75 Cr (around $9 Mn) from Stride Ventures in a debt funding round. 

The startup has passed a special resolution to allot 7,500 non-convertible debentures (NCD) at an issue price of INR 1 Lakh per share, slice’s regulatory filing with the Registrar of Companies (RoC) showed. The debentures issued by the company are non-convertible and have an interest rate of 14.25% per annum.

A separate filing noted that the debt funding round may reach INR 300 Cr (around $35 Mn). The development was first reported by Entrackr.

The funding round comes a month after slice and North East Small Finance Bank (NESFB) announced their merger. The joint venture seeks to integrate advanced technology solutions with initiatives to promote financial inclusion at the grassroots level, an official statement noted.

slice acquired a 5% stake in Guwahati-headquartered bank for about $3.42 Mn in March.

Founded in 2016 by Rajan Bajaj, the lending tech unicorn had to pivot after the Reserve Bank of India’s (RBI) mandate on prepaid payment instruments (PPIs) from last year. slice used to issue credit cards with pre-loaded credit lines, which the RBI has since made impossible.

Now, slice facilitates personal loans and UPI payments via its app, even though the fintech unicorn obtained a PPI licence last December. The fintech unicorn has raised $340 Mn to date and was valued at over $1.5 Bn during its Series C round.

In FY22, slice’s consolidated net loss widened 2.5X to INR 253.7 Cr from INR 100.4 Cr in FY21. Its operating revenue jumped 4.2X to INR 283.1 Cr from INR 67.7 Cr in FY21.

The post Fintech Unicorn slice Secures $9 Mn From Stride Ventures In Debt Funding appeared first on Inc42 Media.

Insurtech major Go Digit General Insurance, which is gearing up for its initial public offering (IPO), has received a show cause notice and multiple advisories from the Insurance Regulatory and Development Authority of India (IRDAI) last month, the company said in a new addendum to its draft prospectus filed with the Securities And Exchange Board of India (SEBI).

The development comes at a time when the company’s IPO is yet to receive final approval from the SEBI even after Go Digit refiled its draft red herring prospectus (DRHP) addressing certain concerns that the market regulator had raised earlier.

Go Digit revealed that the show cause notice from IRDAI has alleged non-disclosure of change in the conversion ratio of the CCPS issued by Go Digit Infoworks Services (GDISPL), the parent of Go Digit General Insurance, to FAL Corporation.

FAL Corporation is a part of Canada-based Fairfax Financial Holdings, which is one of the major investors in Go Digit.

“In terms of the Notice, the change in the conversion ratio of 6,300,000 CCPS issued by GDISPL to FAL Corporation, from ‘1 CCPS for 2.324 equity shares’ to ‘2.324 CCPS for each equity share’, which was reflected by way of an amendment to the JV Agreement dated August 11, 2022, is a material change to the information furnished at the time of applying for registration to the IRDAI,” the company’s regulatory disclosure to SEBI said.

As per the notice, Go Digit was expected to provide the details of such change to the IRDAI but it did not furnish the “full particulars”. Hence, IRDAI has also alleged that the startup is in violation of Section 26 of the Insurance Act.

If an adverse order is passed against Go Digit and its officers responsible for the non-compliance, the insurtech unicorn would be slapped with a maximum penalty of INR 1 Lakh for each day during which such failure continues, or INR 1 Cr, whichever is lower, the addendum mentioned.

Besides, IRDAI has also issued certain advisories and cautioned Go Digit on a few aspects.

The advisory notice has been issued for failing to take the insurance regulator’s approval for the change in remuneration of its Chief Executive Officer (CEO) on the account of the change in ESAR 2018 (employee stock appreciation rights scheme) to ESOP 2018 (employee stock option plans) and for failing to inform IRDAI of the retrospective grant of ESARs prior to the date of grant of the company’s certificate of registration.

“In the event the IRDAI is not satisfied with our responses or we fail to adhere to the advisories and cautions issued by the IRDAI, we may be subject to warnings, show-cause notices and/ or penalties in the future, which would, amongst other things, adversely impact our brand and reputation,” Go Digit said in its regulatory disclosure to SEBI.

Meanwhile, the IRDAI has also cautioned the startup to ensure due care and correct disclosures in the offer documents, of the position in relation to the commission on long-term policies and that acquisition costs incurred in the year, among several other advisories issued.

It is pertinent to note that Go Digit filed its DRHP with the SEBI in August last year. Within months, it also received the IRDAI’s approval to launch the IPO in November last year though SEBI had kept the IPO in ‘abeyance’.

In March this year, the startup refiled the DRHP with the market regulator for its $440 Mn, addressing the latter’s concerns about its ESOPs. 

In the latest filing, Go Digit said its erstwhile Go Digit – Employee Stock Appreciation Rights Plan, 2018 has been amended and changed to ESOP 2018, pursuant to the resolutions passed by the board and shareholders on March 21, 2023 and March 27, 2023, respectively. 

Founded in 2017 by Kamesh Goyal, Go Digit offers insurance policies across verticals including motor vehicle, health, travel, and property. Besides Prem Watsa’s Fairfax, the startup is also backed by prominent names such as Sequoia, cricketer Virat Kohli, and actor Anushka Sharma. 

Go Digit’s IPO comprises a fresh issue of shares worth INR 1,250 Cr and an offer for sale (OFS) of 109.45 Mn shares.

The post IPO Bound Go Digit Gets Show Cause Notice, Multiple Advisories From Insurance Regulator appeared first on Inc42 Media.

While Fintech unicorn Razorpay plans to relocate its parent company to India through a cross-country merger, this move could incur a tax payment of $250 Mn – $300 Mn in its current domicile, the United States.

This plan involves a merger between its US-registered entity and its Indian arm.

Razorpay and its investors are contemplating a merger at a reduced valuation from its peak of $7.5 Bn in 2021. Despite this, advisors on both sides of the deal, including those in the US and KPMG and Deloitte in India, are hesitant due to the paced growth trajectory of the payments processor over the past two years, ET reported.

A reduced valuation would proportionally decrease the tax liability; however, a significant reduction might face challenges in obtaining regulatory approval.

“Yes, there have been discussions to value the company at $3 Bn – $4 Bn, but external advisors are of the view that it may not be cleared by US authorities because of the company’s steady growth over the last year or so, even as peers in the US have seen correction in their valuations,” a source said as quoted in the report.

Razorpay is set to pursue approval from the National Company Law Tribunal (NCLT) within the next two months for the merger. Additionally, the company will appoint an auditor for the valuation discussions.

The fintech unicorn is also looking at raising a new round of funding from investors in 2024 to cover the tax payout. The uncertainty surrounding the duration of NCLT approval has prompted this strategic move.

Razorpay’s decision to relocate is primarily motivated by its goal to list on Indian stock exchanges within the next two to three years. This strategic move is also aimed at enhancing the company’s ability to navigate the regulatory landscape more effectively.

Razorpay has reportedly held discussions with government officials as well regarding the requisite approvals needed for the relocation process.

Founded by Shashank Kumar and Harshil Mathur in 2014 as a payment gateway platform, the startup has branched out into SME payroll management, banking, lending, payments, insurance among others, over the years.

In 2021, Razorpay bagged $375 Mn in its Series F round from Lone Pine Capital, Alkeon Capital, and TCV, among others, at a valuation of $7.5 Bn. Razorpay entered the unicorn club in 2020 after bagging $100 Mn from Singapore’s GIC and Sequoia Capital, among others.

Razorpay’s standalone net profit widened 20% to INR 7.3 Cr in the financial year 2021-22 (FY22) from INR 6.1 Cr in FY21 due to a strong growth in its business.

The startup’s revenue from operations surged 76% to INR 1,481 Cr from INR 841.2 Cr in FY21.

A growing trend among major players in the Indian startup scene is the consideration of “reverse flipping” — relocating their headquarters back to India. Triggered by PhonePe’s shift, which paid INR 8,000 Cr to shift domicile, for a potential public listing, this move has encountered challenges.

As per an Inc42 survey published earlier this year, over 77% venture capital funds and 65% angels said that after the SVB collapse, founders are rethinking overseas registration, with tax implications deterring a return to India for startups registered in the US.

The post Reverse Flip: Razorpay’s Cross-Country Merger May Incur $250-300 Mn Tax appeared first on Inc42 Media.

Fintech SaaS startup Perfios turned profitable in the financial year 2022-23 (FY23), posting a consolidated net profit of INR 7.8 Cr on the back of a significant jump in its service income due to strong performance of its India business.

The startup had reported a net loss of INR 16.8 Cr in FY22 on an operating revenue of INR 136.5 Cr.

In FY23, Perfios’ operating revenue jumped almost 200% year-on-year (YoY) to INR 406.8 Cr.

Founded in 2008 by VR Govindarajan and Debasish Chakraborty, Perfios provides software solutions to financial institutions for credit decisioning, analytics, onboarding automation, due diligence, among others. It earns a majority of its revenue from the sale of services.

At INR 198.5 Cr, income from software support for loan processing had the biggest contribution to its operating revenue and grew almost 90% YoY.

Meanwhile, service income jumped over 28X YoY to INR 166.5 Cr, contributing the second-highest portion to sales revenue.

Perfios also earns revenue from software coding and maintenance services, licence and subscription fees.

On the other hand, if looked at geographically, India continues to be the biggest contributor to the startup’s income.

Perfios posted a 211% surge in its domestic revenue to INR 382 Cr in FY23 from INR 122.6 Cr in the previous fiscal year.

Meanwhile, the startup earned INR 24.7 Cr from its international businesses during the reported year, as against INR 13.8 Cr in FY22.

In a recent statement, Perfios said it processes 1.7 Bn transactions a year with $36 Bn of assets under management (AUM).

Zooming Into The Expenses

In line with the rise in its revenue, Perfios’ total expenses more than doubled to INR 386.4 Cr in FY23 from INR 155.9 Cr in the prior year.

Employee Costs The Biggest Expense: Employee benefit expenses accounted for over 55% of the startup’s total spending during the year.

Perfios’ total employee costs surged to INR 213.5 Cr in FY23 from INR 99.7 Cr in the prior fiscal. In that, a majority was spent towards salaries and wages.

The startup also spent INR 7.1 Cr on employee share-based payments (equity settled).

Other Major Expenses: Depreciation, depletion, and amortisation expense increased by over 200% to INR 32 Cr in the reported period.

Perfios’ legal professional charges surged 80% to INR 41.1 Cr in FY23, while miscellaneous expenses also increased to INR 70 Cr from INR 13.5 Cr in FY22.

In the recent past, there have been a number of new developments at the startup. In September, Perfios signed an agreement with Kedaara Capital for an investment of $229 Mn in its Series D funding round.

Recently, it also acquihired Chennai-based open finance platform Fego.ai and announced an ESOP buyback of shares worth INR 154 Cr.

Perfios also appointed Sumit Nigam as the startup’s chief technology officer (CTO) and Anu Mathew as chief people officer (CPO). At that time, the startup also said that it is eyeing an IPO in the next 18-24 months.

The post Fintech SaaS Startup Perfios Turns Profitable In FY23, Revenue Triples To INR 406 Cr appeared first on Inc42 Media.

It’s no secret that India is quickly transitioning into a cashless economy. A look at our digital transactions says it all. We topped the list of countries with the largest digital payments with a whopping 8.5 million transactions in 2022, and 46% of global real-time payments comprise transactions made in India. 

But with a population of 1.4 billion, this journey to digitisation is bound to reach parts of the underserved population later than the rest. Here’s what an Oxfam report published late last year had to say about financial inclusion in the context of digital payments: “The likelihood of a digital payment by the richest 60% is 4 times more than the poorest 40% in india.” 

There are typically several obstacles that come with solving financial inclusion:

• Lack of documents: Proof of identity among the financially excluded has proved to be a great challenge. However, the adoption of Aadhar has successfully bridged this gap. As of 2022, the Aadhar coverage in the country was an impressive 92.5% with 99.9% adults having an Aadhar number.
• No formal credit history: When availing credit, the underserved population usually lacks a formal credit history. And lenders rely on such information to extend loans to cohorts who’re considered “risky”.
• No or minimal collateral: Underserved applicants lack assets that they can pledge. This, coupled with the lack of credit history makes lenders wary of extending financial aid to them.
• Small-ticket needs: It’s intuitive for financial institutions to go where the money is. And if meeting the needs of the financially excluded is a high-effort-and-low-impact pursuit, the chances of businesses extending their services to the underserved population are less likely. As a result, it often takes government-backed initiatives for financial services to meet the needs of the population.  

Most of these challenges are being addressed, thanks to government initiatives as well as technological developments. Add to this a high smartphone penetration of 71% and a steep rise in the number of bank accounts opened in the past few years, and we’re closer to achieving financial inclusion! 

In fact, we’re getting there already: As of March 2023, India’s Financial Inclusion Index stood at 60.1 out of 100, a significant improvement from 56.4 last year. 

How Are FinTechs Bridging The Financial Inclusion Gap? 

There’s no doubt that the RBI and government-led initiatives have driven financial inclusion to where it is today. But it’s hard to discount FinTechs’ role in this growth story. 

Here are some ways that fintechs have leveraged the digital infrastructure to bridge the gap and promote financial inclusion:

• Low-documentation onboarding: Thanks to the seamless linking of Aadhar to mobile numbers, fintechs are now able to onboard users with very little documentation. This has significantly simplified the KYC process, enabling better access to financial services—be it availing of loans, accessing insurance, or making use of e-wallets and payment apps for day-to-day transactions. 
• Embedded finance and accessibility to financial services: Awareness of financial services has long been an obstacle to financial inclusion. But now, thanks to embedded finance, financial service providers can go where the customers are. This means that users across the country can access digital services like payments, pay later services, and more on online platforms that they already access. 
• Lending to thin-file and NTC borrowers: Digital lenders now use alternate data to assess the creditworthiness of borrowers. This holistic approach to underwriting has made credit accessible to borrowers who have little to no formal credit history, making loans more accessible. 
• Providing sachet-ized financial services: The use of alternate data has also made lenders more open to providing credit to borrowers with low effort and more scalability. Borrowers can now easily avail of low-ticket financial services and minimum documentation. As a result, products, like equated daily payments (EDIs), are now on the rise. 

India is already on its way to becoming a financially inclusive economy. And we are sure to get there with the strong collaboration between technology, government, and innovation from fintech companies. 

Can we then rely on digitization to add to 10-12% of our economy, as expected? I, for one, am confident that we will reach this dream sooner than we expect! 

The post Bridging The Financial Inclusion Gap: How Are Fintechs Doing Their Part? appeared first on Inc42 Media.

Technology has been the crux of the Indian finance industry, fueling a pronounced shift from offline to digital modes. Started with Internet banking, fintech graduated to online payments, and account opening, and has finally led to the advent of digital lending. The lending business has been highly influenced by digitisation in India which can be attributed to amplified internet penetration and high customer expectations. 

A riveting evolution of digitisation across the Indian lending landscape with the growth of diversified fintech players and lending models has disbursed the number of digital loans by nearly 12 times by the end of 2020. 

NBFCs play a pivotal role in this emerging lending ecosystem and accounted for 55% of loans disbursed through different channels in 2020. Led by fintech NBFCs, digital lending has services ranging from personal loans to business loans to vehicle loans, loans to individuals and MSMEs for everyone from the young generation, underserved segments to salaried customers.

Digital Lending has become a popular financial choice in recent years due to its convenience and accessibility for borrowers. However, there are potential risks associated with digital lending for NBFCs and it is crucial to adopt certain risk mitigation strategies which will ensure the stability and sustainability of their business. 

Assessing Potential Risks 

The primary risk associated with any kind of lending including digital lending is the possibility of non-payment on their loan repayments. 

To mitigate this risk, digital lenders need to accurately assess the creditworthiness of the borrower by implementing advanced data analytics and credit assessment models to evaluate the borrower’s credit history and repayment capacity, which will enable digital lenders to make informed decisions and mitigate credit risk. 

Since digital lending relies on internet software and online platforms, customers are also prone to cyber-attacks, technical glitches or system failures which disrupt operations causing loss of data, and leading to errors and delays. 

Digital lending companies should invest in vigorous IT infrastructure, employee training, cyber security measures, and disaster recovery operations and ensure that security protocols are being practiced and revised to reduce operational malfunctions. 

Failure to comply with regulations related to lending practices, anti-money laundering, customer data privacy and KYC norms can result in penalties, legal issues and reputation damage. As a result, digital lending channels need to stay updated with regulatory changes and create a robust compliance framework that helps lenders avoid legal troubles and establish credibility in the market. 

Implementing Effective Risk Management Strategy 

To manage digital lending risk, lenders not only need to adopt an intelligent but proactive risk management approach catered to establish a robust credit assessment model, invest in a strong IT framework, build a regulatory compliance network and last but not least diversify lending portfolios. 

In addition to this, digital lenders can adopt advanced encryption protocols, firewalls, regular security audits and multi-factor authentication methods to protect against personal data breaches and prevent unauthorised access. Most importantly, these recommendations will help build trust in the digital lending network, thereby providing a progressive environment for the fast-paced world of digital lending. 

The RBI has also constituted a working group on digital lending which has offered a strategy aimed at achieving a balance between measures addressing the challenges posed by financial lending and reaping the benefits offered by digital lending. 

The group has provided recommendations around setting up a self-regulatory body to overlook lending channels, conducting coordination committees to address issues in the digital financing spending sphere, appointing TRAI as its member, and working towards development and compliance around baseline technology standards. 

Thus, RBI’s balanced approach will aid financial lenders in reaping the benefits of ongoing digital innovation while minimising possible risks.

Final Thoughts 

In a nutshell, digital lending offers numerous benefits for both borrowers and lenders but it comes with a certain set of obstacles that can be mitigated by employing a proactive risk management approach that is efficient and delivers promising results. 

Thus, implementing risk mitigation methods will help foster a positive customer experience powering the rapid development of a concrete and comprehensive digital financial lending industry.  

The post Digital Lending Strategies For Effective Risk Assessment And Mitigation In Finance appeared first on Inc42 Media.

A hedge against inflation, an investment and a symbol of wealth, gold indelibly holds a special place in the hearts and minds of Indians. The borderline obsession has been well documented, during the Diwali season, the affinity for gold reaches new heights. 

In 2022, the demand for gold in the country surged to 265 tonnes, valued at $15.3 Bn, marking a significant increase from the 120 tonnes recorded in 2020.

Despite generational shifts, the country’s enduring inclination towards gold has remained undeterred. However, the evolving landscape of the new age calls for fresh bets, and the Indian gold startup ecosystem can be broadly categorised into two segments — investment and lending.

Notably, startups operating in these areas cater to the growing demand for diversified gold-centred products and offerings among Indians. 

“The gold startup landscape in India is currently undergoing a notable transformation. The traditional Indian preference for tangible assets, such as physical gold, is encountering competition from the burgeoning digital gold sector, which has been gaining substantial momentum, primarily among a younger demographic,” said Suraj Bathija, the cofounder and chief sales officer at AlgoBulls.

A Sea Of Gold Startups

The proliferation of technology and rapid adoption of new-age business models and tools has spawned a bevy of new players with their own set of differentiated offerings all catering to the gold needs of the Indian consumer. 

Traditionally, both the gold lending and gold investment industries have been dominated by state-backed and private banks. The only competition they had was legacy giants like Muthoot Finance and Manappuram Finance, which trace their origins back to the mid-20th century. 

But as the Reliance Jio-fuelled internet boom of 2016 shored up the penetration of digital financial services in the country in successive years. Subsequently, many small startups emerged from all parts of the country to tap into the burgeoning demand for gold and allied products. 

Making the first major headway were digital payments giants like PhonePe, Paytm and Google Pay, which built gold marketplaces, enabling users to buy and sell digital gold. 

Sensing the opportunity, players such as Jar, Spare8, and Digigold, among others, began offering differentiated investment offerings embracing gold. 

From simply investing substantial amounts in gold earlier, users could now pitch in small amounts as low as INR 10, which would then be auto-invested in the commodity. These platforms also offer the attractive proposition of liquidating investments quickly without any lock-in period.

The differentiated offerings also include connecting users with financial institutions to provide the former with more accurate information about their gold’s worth. But, it appears that gold loan startups are the ones truly disrupting the space. 

Besides, fintech startups such as Oro Money, Yellow Metal, Rupeek and Bold Finance have evolved to offer users loans against gold in a hassle-free and paperless manner.

Opportunity Aplenty

As per the RBI data, gold loan disbursals nearly doubled to INR 80,617 Cr in September 2022 compared to INR 46,791 Cr during the same month in 2020. However, this market has largely been led by unorganised players (almost 65%), who offer loans for gold.

The remaining 35% market share is contributed by organised and regulated entities such as NBFCs, which have deployed technology and ground networks to help users avail lending options. 

Despite such a huge size, a report by Systematix notes that India’s overall gold market is still grossly underpenetrated at a mere 7%. With nearly three-fourths of Indian households owning gold in some amount, the country cumulatively holds an estimated 27,000 tonnes of gold, worth nearly $1.4 Tn.

As a result, the homegrown gold market appears to be sitting on a huge opportunity, which could be leveraged by fintech startups to offer both credit and investment offerings. 

What’s Making Indian Gold Startups Shine?

The allure of gold has largely been led by how the accumulation of the yellow metal is a safe investment bet. While the thirst of Indians for gold only appears to be growing, Indian startups, too, are not behind in carving a niche. 

Interestingly, these are some of the key steps that these startups are taking to stay ahead in the game — be it propelling gold investments or lending.

• Using Transparency To Build Trust: Unlike pawnbrokers and moneylenders that charge exorbitant interest rates in the range of 25% to 50%, Indian fintech startups offer a more transparent pricing and interest structure. This has helped build trust among the masses.
• Procurement In Minute Increments: Unlike traditional players, users can just go online and purchase digital gold for as low as INR 10 with no upper ceiling. 
• Convenience & Cost-Effectiveness: Customers can buy digital gold online in small amounts without worrying about storage, as fintech companies handle secure gold storage on behalf of investors, reducing costs and ensuring convenience. 
• The Bulk Advantage: In the case of digital gold marketplaces, they can procure the commodity at a slightly cheaper rate owing to bulk purchases. While traditional retailers buy gold in small quantities, these fintech platforms purchase the price-sensitive commodity in kilos, enabling them to pass on some of the benefits to the end customer.
• Simplicity Of Use: Digital gold offers comparatively modest transaction costs, is simple to acquire and is easy to divest. Coupling this with the ability to monitor gold valuations in real-time and value appreciation, online transactions offer the comfort of buying gold from the comfort of one’s home. 
• Strict Govt Oversight: The attractiveness of gold startups also comes from its now digital nature, which brings in more transparency, owing to strict regulation by the RBI. With KYC norms and strict regulatory guardrails in place, users have the comfort of knowing that they can bank on these new-age platforms.
• Plethora Of Options & Future Scalability: The startups offer a slew of diversified offerings to customers. Players such as Indiagold, Ruptok and Dvara SmartGold enable customers to both invest in gold and avail credit based on gold. As fintech penetration grows further, more and more startups are expected to offer differentiated products ranging from SIPs to gold trading.

“The digital gold startup arena is poised for continued expansion in the foreseeable future. As an increasing number of Indians become acclimatised to digital financial services and investment practices, and as these platforms diversify their offerings, it is anticipated that they will garner heightened patronage,” Bathija claims. 

Numerous Challenges In The Gold Startup Arena

While most founders that Inc42 spoke with expressed confidence that the sector was poised for growth and further expansion, the space continues to be marred by its own set of challenges. 

A founder at a gold savings startup, requesting anonymity, said that there still exists a gaping hole between digital and conventional gold markets and that it is imperative to establish a seamless connection between the two. 

He also flagged mounting competition, lack of consumer education, and regulations as other key challenges.

Flagging regulatory challenges, another founder told Inc42 that different state associations set different prices every day and it becomes complicated for startups to keep track of data to ensure their rates are on par with local rates. 

“Owing to the small margin nature of the gold industry, we have to reach out to as many people as possible to effectively scale up the platform. Additionally, more distribution channels and ground partners complicate the process further as the latter expect a higher margin product when it is not in reality,” said a founder, highlighting another challenge. 

He also noted that the affinity for physical gold also poses a major challenge and could only be fixed by a certain age profile (younger demographic attuned to tech and ecommerce) and a certain mindset.

Speaking with Inc42, the cofounder of Dvara SmartGold Jaydeep Banerjee said that the overall gold startup ecosystem, too, has been hit by the ongoing funding winter.  

Another founder said that the valuation bubble created by other sectors has burst but the gold startup ecosystem has emerged as collateral damage, despite having positive growth, a sensible business plan and positive unit economics.

He also flagged gold startups offering gold-linked savings plans for as low as INR 1 per day, saying that companies offering ‘loose change kind of goal’ may be doing a disservice to the end customer. 

Notwithstanding the challenges, Banerjee believes that the Indian gold startup ecosystem is a revolution in the making, which will eventually help bring down the country’s import bill by a big margin, bring more transparency to the ecosystem and make the entire process digital. 

Meanwhile, Bathija claims that the gold startup landscape in India is currently in flux and digital gold is gaining ascendancy as a convenient and cost-effective investment avenue. As per a July 2023 report, India was home to 16 companies that offered digital gold products and had an estimated 5 Mn to 6 Mn active gold accounts.

As per a KPMG report, the Indian digital gold market size is projected to become a $100 Bn market opportunity by 2025, largely driven by the increasing adoption of fintech platforms and growing awareness of gold as an investment option among the young.

The post India’s Gold Rush: How Startups Are Reimagining Gold Investment And Lending Landscape appeared first on Inc42 Media.

Better World Technology Pvt Ltd, the Indian entity of fintech SaaS unicorn Zeta, turned profitable in the financial year ended March 31, 2023. It reported a profit after tax (PAT) of INR 21.94 Cr in the financial year 2022-23 (FY23) as against a loss of INR 20.7 Cr in FY22.

The Bengaluru-based fintech SaaS unicorn’s revenue from operations grew almost 33% to INR 816.20 Cr in FY23 from INR 615.05 Cr in the previous fiscal year.

Total income, including other income, rose to INR 817.79 Cr in FY23 from INR 616.11 Cr in the previous year, an increase of 32.73%.

Founded by Bhavin Turakhia and Ramiki Gaddipati in 2015, Zeta offers an omni stack platform to financial institutions for processing and issuing debit and credit cards, offering loans, and fraud and risk management.

Its products are used by banks like RBL Bank, IDFC First Bank and Kotak Mahindra Bank among others. French food services and facilities company Sodexo also uses Zeta’s offerings to process its payments.

The startup also offers digitised solutions to enterprises such as automated cafeteria billing and more. It has developed an access control server (ACS) for ecommerce players to offer differentiated security features for payments.

The Expenditure Breakdown

The Bengaluru-based unicorn’s total expenses grew 24.97% to INR 795.85 Cr in FY23 from INR 636.82 Cr in FY22.

Employee Benefit Costs The Biggest Expense: Employee costs rose 22.53% to INR 631.57 Cr from INR 515.44 Cr in the previous fiscal year and accounted for 79% of the total expenditure. Staff welfare expenses almost grew over 3X to INR 12.13 Cr in FY23 from INR 3.97 Cr in FY22.

Other Expenses In Check: Unlike FY22, when other expenses more than doubled year-on-year, other expenses, which included rent, training recruitment expenses, and legal charges, increased just 35% to INR 151.07 Cr from INR 111.86 Cr in the previous fiscal year.

Meanwhile, the startup’s cash and cash equivalents declined 54.91% to INR 25.89 Cr in FY23 from 57.42 Cr in FY22. EBITDA margin improved to 2.68% in FY23 from -3.36% in FY22.

Zeta, which entered the unicorn club in May 2021 after raising $250 Mn in a funding round led by Masayoshi Son’s SoftBank, has raised a total funding of $340 Mn till date. It counts names like Softbank Vision Fund, Sodexo, and Mastercard among its backers.

Besides India, Zeta’s offerings are available in countries like Brazil, Spain, the Philippines, and Vietnam. In an interview with Hindu Business Line, Turakhia said the startup is looking to expand its presence in North America, considering it constitutes about 30%-35% of the global revenue opportunity in the sector it operates in.

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InCred Holdings Limited, the holding company of fintech startup InCred Financial Services Ltd, has secured commitments worth INR 500 Cr ($60 Mn) in its Series D Funding round. 

The startup said it has received interest from various investors, including a global private equity fund, corporate treasuries, family offices, and UHNIs for the funding round, which will turn it into a unicorn.

The fresh capital will be strategically deployed across InCred’s core business verticals – consumer loans, student loans, and MSME lending.

“This funding commitment marks a significant milestone in our journey and takes us into the ranks of unicorns. With our ‘Risk First’ approach, cutting-edge technology, and class-leading management team, we are well positioned for sustained growth in the business over the years to come,” Bhupinder Singh, founder and group CEO of InCred, said. 

“Our goal is to make InCred a central part of every Indian family’s financial aspirations, in line with the powerful growth seen by the Indian economy, and to eventually list the business unlocking significant value for all our shareholders,” Singh added.

InCred Finance claims to have built a INR 7,500 Cr loan book within six years, and a growth over 50% CAGR over the last three years. 

On completion of the funding round, InCred will become only the second Indian startup to join the unicorn club in 2023. Zepto is the only Indian startup to join the coveted club this year. 

(The story will be updated soon.)

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Fintech major Mswipe Technologies has elevated chief executive officer (CEO) Ketan Patel as a cofounder. Additionally, Nayantara Bhargava, formerly in charge of banking and partnerships, has been elevated to the role of chief business officer.

In a statement, the company said that this diverse leadership is aimed at creating an inclusive and dynamic environment that fosters success and equality. With this, MSwipe aims to propel its growth in India on a global front, while promoting innovation, and providing a seamless experience to the merchant community. 

Commenting on the new elevations, cofounder and CEO Patel said, “This initiative has been taken to strengthen the position of Mswipe Technologies in the Indian market, but while we maintain our focus on that, we plan to expand our reach to multiple other countries in the near future. 

The company, which recently partnered with Etisalat in the UAE, has already started operations in Singapore, with plans to launch in other countries as well, he added. 

“The advancements in Mswipe’s leadership team marks a significant stride in fortifying the company’s journey. As we embark on international ventures, our unwavering focus remains on strategic initiatives, customer-centricity, innovation, and sustainable growth,” Patel added. 

Founded in 2011 by Manish Patel, Mswipe is an omnichannel digital payment platform providing a host of payment acceptance solutions to merchants across categories across 800 cities and towns of India. 

It also offers digital lending to merchants through its non-banking financial corporation (NBFC) arm Mcapital. The Mumbai-based fintech major counts the likes of B Capital, UC-RNT, Falcon Edge Capital, Matrix Capital Partners, DSG Partners and Epiq Capital among its investors. 

Last year, Mswipe got approval for the license of a payment aggregator from the Reserve Bank of India. Back then, it said that the company would look forward to developing an in-house online payment gateway to offer full-stack payment solutions to offline and online merchants and plans to add more merchants to the platform.

Besides Mswipe, a number of other fintech startups have also made announcements of new appointments in recent times. 

Recently, fintech unicorn Razorpay elevated Rahul Kothari to the position of Chief Operating Officer (COO) for India and Malaysia. PayU India announced the promotion of Anirban Mukherjee to the role of CEO, in which he would be responsible for the overall business management of the company.

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Investech startup INDmoney reported a 7.7% rise in net loss to INR 73.9 Cr in the financial year 2022-23 (FY23) from INR 68.6 Cr reported in the previous fiscal year, hurt by a sharp jump in its employee benefit expenses.

The bottom line was hurt despite INDmoney’s operating revenue almost doubling to INR 40.6 Cr during the year from INR 21.8 Cr in FY22.

Founded by Ashish Kashyap in 2019, INDmoney claims to be a one-stop super finance app for saving and investing. The startup allows users to invest in stocks, mutual funds, IPOs, and fixed deposits. Users can also invest in US stocks through the INDmoney app.

As such, the startup earns operating revenue from the sale of services, which includes income from advisory and distribution services and income from broking activities.

In FY23, INDmoney earned a majority of its revenue from other income, including gain from sale of investments and other non-operating income.

INDMoney’s other income stood at INR 46.7 Cr in FY23 as against INR 19.7 Cr in the previous year.

Overall, the startup’s total revenue jumped 111% year-on-year (YoY) to INR 87.4 Cr in FY23.

INDmoney is backed by marquee investors like Tiger Global, Steadview Capital,  Sixteenth Street Capital, and angels like Lenskart founder Peyush Bansal and influencer and founder of Nearbuy.com, Ankur Warikoo.

The startup competes with the likes of Upstox, Groww, and Zerodha. 

Zooming Into The Expenses

INDmoney’s overall spending grew 1.5X to INR 200 Cr in FY23 from INR 133.4 Cr in the prior fiscal year. 

Employee Costs The Biggest Expense: At INR 111.9 Cr, employee benefit expenses accounted for 56% of the startup’s total expenditure. 

Employee benefit expenses jumped 2.6X YoY from INR 42.3 Cr due to a sharp increase in ESOP costs.

While INDMoney spent INR 58.9 Cr towards salaries and wages, its employee share-based payment (equity settled) jumped over 11X YoY to INR 47.6 Cr in FY23.

Marketing Expenses Decline: INDmoney managed to cut its marketing costs by over one-fourth to INR 41 Cr in the reported year from INR 57 Cr in FY22.

Among other expenses, the startup’s total depreciation, depletion, and amortisation expense grew to INR 5.4 Cr in the reported period from INR 3.7 Cr a year ago. Meanwhile, software, cloud storage, and server charges grew 1.3X YoY to INR 32.1 Cr in FY23.

INDmoney last raised $11 Mn in its Series D funding round in March last year.

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PhonePe on Tuesday (November 07) said the number of registered users on its platform has crossed the 50 Cr mark and one in three Indians is now registered with the fintech giant.

PhonePe, which was founded in 2016, said it has onboarded over 37 Mn merchants covering over 99% of the postal codes across India.

The Walmart-owned company, which began operations as a UPI platform and enjoys the highest share in UPI transactions, has been on an expansion spree for the last year or so. It has entered multiple new segments, ranging from insurance to wealth management and lending to joining ONDC.

In order to scale up the new businesses, PhonePe founder and CEO Sameer Nigam said the company has elevated some of the key executives to take on larger roles in the group as the CEOs of new segments.

The newly elevated executives are:

• Hemant Gala: He has been promoted to the role of CEO for PhonePe’s lending business. He was a part of the founding team of PhonePe and has worked across multiple verticals within the company over the past 7 years. 
• Vishal Gupta: He has been promoted to the role of CEO for PhonePe’s insurance business. He was also a part of the founding team and played multiple leadership roles across product, design, risk, customer-experience to build and scale the payments and merchants business.
• Vivek Lohcheb: He has been promoted to the role of CEO for ecommerce app Pincode. In the new role, he will be responsible for scaling the Pincode offering across key cities in India. Previously, Vivek headed the offline business at PhonePe, where he was responsible for expanding the company’s offline merchant network and acceptance.
• Ujjwal Jain: He has been promoted to the role of CEO of Share.Market to head the company’s wealth and stock broking business. Previously, Ujjwal founded WealthDesk and created a curated research baskets category on broking called WealthBasket to address the challenges faced by the funds and broking industry as a whole.

The developments come at a time when PhonePe is looking to spread its wings and turn itself into a super app. The company, which is also eyeing an initial public offering by 2025, moved its domicile to India from Singapore last year and also completed its spin-off from the Flipkart Group.

The company has also raised $850 Mn in funding as part of its announcement of a $1 Bn fund raise last year.

Last month, PhonePe said its revenue rose 77% to INR 2,914 Cr in FY23 due to growth in money transfers, mobile recharges, bill payments and launch and scale-up of new products and businesses. However, the company didn’t disclose its net loss/profit for the year.

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The exponential rise of investment tech platforms like Zerodha and Groww in the last few years has proven but one thing — there was immense headroom for innovation and disruption in the Indian stockbroking arena, which the legacy players took a while to realise.

Nevertheless, the damage was done and retail investors, both young and old, flocked to these platforms in hordes for reasons galore — ease of trade, user experience, fee, convenience, word of mouth, and we have barely scratched the surface here.

It is also worth mentioning that the Covid-19 pandemic gave a booster shot to the two investment tech unicorns, as a great tide of new users embarked on the stock market route to make riches when the Indian economy was trying to recover after multiple lockdowns.

Interestingly, new-age retail investors have since been embroiled in the Zerodha Vs Groww debate, which we intend to conclude in this article today.  

However, before we delve deeper into the discussion, it is imperative to note that the two platforms command 40% of the stockbroking market share in terms of active users in India, as per NSE data.

It’s All About Numbers… Or Is It? 

An early bird in the Indian investment tech space, Zerodha (incorporated in 2010) checks every box essential for being one of the biggest stock brokers in the country. Moreover, it currently holds a 20% share of the NSE’s total trading volume.

Notably, towards the fag end of September this year, the Zerodha CEO, Nithin Kamath, took to Twitter (now X) to announce that the firm was valued at INR 30,000 Cr, or about $3.6 Bn.

In the same week, the Bengaluru-based fintech unicorn reported that its total revenue for the financial year ended March 31, 2023, crossed the INR 7,000 Cr mark. The bootstrapped unicorn’s net profit during the period under review stood at INR 2,907 Cr, up 39% YoY, largely on the back of strong growth in business and other key metrics. 

 Meanwhile, the Tiger Global-backed fintech unicorn, Groww, surpassed Zerodha in terms of active investors at the end of September 2023. As per the National Stock Exchange (NSE) data, Groww had 6.63 Mn active investors at the end of September 2023 as against Zerodha’s 6.48 Mn.

Notably, any individual who trades even once on the platform is an active user of these platforms. And if one goes by this logic, then Groww has already dethroned Zerodha, and we all can now stop reading this article and go back to running our daily errands. But there’s a catch. The metric has too many moving parts. 

Nevertheless, Groww’s active user base of 6.6 Mn against Zerodha’s 6.4 Mn may not look much, but the rate at which the former has been able to increase its users from 4.1 Mn in FY22 to 6.6 Mn in FY23 is quite a progress. On the contrary, Zerodha’s user base slipped from 6.5 Mn in FY22 to 6.4 Mn in FY23.

As per NSE data, Zerodha had 3.4 Mn customers in March 2021, whereas Groww had 0.78 Mn. Zerodha’s user base has only doubled, growing at a steady pace and even stagnating over the last couple of years, Groww saw its customer base surge by an impressive 750%.

Importantly, Groww ventured into stock trading as recently as 2020. Before that, it operated solely as a mutual fund distribution platform. Furthermore, its expansion into loans and consumer payments didn’t happen until this year.

Moving on, just like its bootstrapped opponent, Groww, too, is profitable. However, the profitability was only achieved in FY23 as revenue from operations tripled to INR 1,227.8 Cr. The startup posted an FY23 net profit of INR 448.7 Cr against a net loss of INR 239 Cr a fiscal ago. 

The Battle For Passive Investors Is On, But Why?

The double whammy of global macroeconomic headwinds and improving fixed deposit (FD) rates has particularly led to the highest-ever exit of active retail investors from the public markets in the recent past.

In FY23 and FY24 (so far), retail participation has been paltry compared to FY21 and FY22. On the NSE, the share of retail investors against the total trading turnover dropped from 45% in FY21 to 36.5% in FY23. Similarly, the number of active retail investors fell from 11.7 Mn in January 2022 to 8 Mn in March 2023.

Further, cumulative net outflows (people selling stocks or ditching intra-day trade) in April and May 2023 were the highest in the last seven years.

This is the reason why a lot of companies, which earlier did not see much participation from passive investors, have now started launching passive funds, and Zerodha and Groww are no exceptions.

Zerodha, which relies on active retail investors for 90% of the company’s total revenues, announced the launch of two passive mutual funds, Zerodha Nifty LargeMidcap 250 Index Fund and Zerodha ELSS Tax Saver Nifty LargeMidcap 250 Index Fund, last month.

A passive mutual fund comes at a lower expense ratio compared to an active mutual fund but doesn’t guarantee as much returns to the fund investors as an active one. Kamath highlighted the same by stating that Zerodha will be a passive only AMC to avoid the conflict of promoting what generates higher income (active funds). By focussing only on index products, we can hopefully help spread the idea of passive funds in India, Kamath said while announcing Zerodha’s two AMCs.

This is ofcourse a distant approach from what Zerodha has been focussing on for the past decade

The funds were launched under Zerodha Fund House, an asset management company (AMC), which it formed in a joint venture with Sequoia-backed smallcase.

Similarly, in September, Groww received approval from SEBI to launch its first index fund, Groww Nifty Total Market Index Fund, paving the way for its entry into the mutual fund space. Earlier this year, Groww acquired the mutual fund business of Indiabulls Housing Finance for INR 175.6 Cr.

In a report, ratings firm ICRA highlighted that Groww generated 80% of its revenues from F&O trading in FY23.

According to market experts, at a time when F&O traders are bleeding losses, with a SEBI report suggesting that 90% of these investors faced losses, passive trading will continue to be the norm for some time.

As per Motilal Oswal Financial Services, retail AUM in Exchange Traded Funds/passive funds stood at INR 9,700 Cr in FY23, growing at a CAGR of 56% since FY19. This growth has been driven by a thrust from online distributors. 

Additionally, the share of ETFs in total retail AUM is a meagre 2%, which means the market is ripe for disruption. 

Traditionally, stock brokers steered away from passive funds because of lower commissions, fees and less return on investments.

“A reason why the retail investors will turn to passive funds offered by discount brokers is that the space is dominated by AMCs or banks, which charge a heavy broking fee and maintenance charges. This upsets individual investors. However, discount brokers like Zerodha and Groww take minimal to zilch maintenance charges,” said a Bengaluru-based analyst.

On the other hand, Zerodha and Groww will move towards passive funds whose performance typically depends on how indexes perform, in order to bring down their operational expenses, the analyst added. 

Calling A Spade A Spade: Groww’s Active Users Not Enough To Crush Zerodha

According to industry experts, the increase in the number of Groww’s active users may not give it an edge over Zerodha. This is sheer because of the strong technology stack and the trader community-driven approach Nithin Kamath-led firm has built since its inception.

A report by HDFC Securities mentions that Zerodha has an overall customer base of 12 Mn users, of which 6.5 Mn are active users. Further, of the total active users, 2.5 Mn are F&O traders.

The research states that nearly 50% of the 2.5 Mn F&O traders at Zerodha are sticky, semi-professional, and place strategy-based trades. In addition, the top 35% of customers account for 70% of Zerodha’s revenues. 

The bottom 50% of the F&O traders meanwhile churned within the last year, as per the report.

This is what Nithin Kamath said in a blog post earlier that a small community of very active intra-day and F&O traders are maximising the revenues for discount brokers.

Additionally, Zerodha has various offerings. Its products like the Kite app for active traders and Coin for passive mutual fund investors have given the investment tech platform the leverage to target niche audiences.

“Zerodha believes that the user base of the two apps is diverse and needs to be targeted separately. While the typical user of Coin is a passive investor in MFs and does not want to be bothered with regular market updates, the Kite app is targeted at a customer who needs regular stock or trading-related notifications. Passive products such as Ditto Insurance are likely to be launched on the Coin app,” according to an HDFC Securities analysis.

Meanwhile, Sonam Srivastava, the founder and CEO of Wright Research points out that the kind of tech products that Zerodha has developed for its users are unparalleled in the stockbroking industry.

“It is a completely evolved technological infrastructure. The algo solutions, urgent alerts for entry/exits to the active retail investors (intra day/F&O), the varied products and its B2B product Kite Connect which offers other fintech platforms access to Zerodha’s products, technology, and user stickiness has worked tremendously in favour of this firm,” Srivastava said.

Zerodha still has a share of 20% of the overall trading volumes in India, almost 70% higher than Groww, which is a huge gap to close for the latter, Srivastava added.

The Nithin Kamath-led stockbroking firm has also doubled down on its education channel resources to tap the growing pool of investors. 

Zerodha’s Varsity (its education-based platform) claims to run on zero-profit education initiatives — from helping novice investors to offering skill-based certifications to serious traders. Also, Kamath recently launched a new YouTube channel, Zing, to target the growing number of young investors.

However, analysts believe that this is Zerodha’s attempt to counter the huge marketing push of the closest rival, Groww, which has been leveraging content/influencer marketing over the past several years to tap young investors.

It is imperative to mention here that Groww, too, is focussed on spreading financial awareness. Under its “Ab India Karega Invest” initiative, the startup organises financial awareness sessions. Moreover, it also publishes newsletters centred around financial news and education, besides creating videos in different languages.

Groww Needs To Grow Its Offerings

According to a July 2023 report published by ICRA Ratings, Groww needs to diversify its income stream, as a sizeable share of its FY23 broking revenues is from futures and options (F&O) broking (over 80% of the broking income). 

“Going forward, Nextbillion Technology’s ability to maintain the momentum of client additions while improving its revenues and profitability and maintaining comfortable capitalisation would remain critical from a credit perspective,” the report stated.

Currently, Groww doesn’t charge annual account opening and maintenance charges from its users like Zerodha, which as per analysts draws new and young customers to the platform. However, much still depends on how Groww builds products to ensure customer stickiness. 

“Millions of users opening new accounts with Groww will not ensure monetisation unless the platform can sell any of its products to these users. The conversion would matter for which Groww will have to experiment with diverse product offerings,” a veteran investor said.

Notably, Groww’s revenues mainly come from charging brokerage fees of up to INR 20 per buy/sell order.

Zerodha & Groww: Comparing Apples And Oranges?

Despite the recent buzz around Zerodha and Groww competing in terms of user growth and increasing revenues, experts in the industry believe that Groww still has a significant journey ahead in capturing a highly monetisable user base similar to Zerodha.

At the same time, keeping the marketing expenses in check will be a challenge for Groww, which has largely ignored community-based organic growth like Zerodha.  

The CEO of FinEdge Harsh Gahlaut said that comparing the two investment tech platforms is like comparing apples and oranges.

“Groww has used the money it raised to rack up numbers on client acquisition at any cost. It rode the boom of first-time users for both stocks as well as mutual funds over the last 3-4 years and that has helped it surpass Zerodha on the number of ‘subscribers’. If this is the only metric then clearly Groww is the winner,” he added. 

 Gahlaut also noted that Zerodha currently has no competition. “The broking industry has serious challenges of revenue sustenance. This is because most traders can have a very short span on the markets. This problem is even more with first-time users… and Groww has a significant number of such clients,” he noted.

Meanwhile, Vivek Banka, the cofounder of fintech startup GoalTeller is of the view reliance on VC money and operating in highly volatile markets put it at a disadvantage compared to Zerodha, which is bootstrapped.

“The pace of user growth will stagnate at some point. Stockbroking is kind of cyclical as when a recession hits, sooner or later, there can be degrowth in the active user base. The true test of businesses is during such times and companies with heavy PE/VC funding will be in a fix,” Banka added. 

It cannot be denied that the Kamath brothers-led startup has stood the test of time, gone through various market cycles and is sitting on a loyalist userbase. 

Zerodha maintains a dominant position in the market, despite the growing competition from its closest rivals such as Groww, Angel One, and even HDFC Bank.

This may clarify why Zerodha stands out as the sole discount broker that imposes an annual account maintenance fee of over INR 300, while other platforms do not levy such charges.

Be that as it may, Groww is yet to reach the maturity that Zerodha is in charge of today. A mere rise in active users does not put it ahead of Zerodha in the race. 

While one cannot deny that Groww offers more comfort to novice investors than any other platform in the stockbroking market, this is hardly any insurance for their stickiness. 

For the platform to have a more sustainable user base, more market cycles will have to forge their journeys. And finally, in terms of user sustainability and diversification, it’s quite likely that Groww may face substantial headwinds going ahead.

Update | 8th November, 1:00 IST

Note: The story has been updated to include the info on the year in which Groww ventured into the stock trading segment and its education initiatives.

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Fintech unicorn Razorpay has promoted Rahul Kothari to the position of Chief Operating Officer (COO) for India and Malaysia. This elevation coincides with Razorpay’s global expansion, beginning with the South East Asia (SEA) region.

Kothari boasts more than twenty-one years of experience in the US, European, Australian, and Indian markets, having worked with organizations like PayU, WNS Global Services, and The Boston Consulting Group, among others.

In 2019, he joined Razorpay as the Chief Business Officer (CBO) and played a pivotal role in the global growth of the company as a full-stack B2B fintech platform. He also spearheaded the launch of the company’s first international payment gateway in Malaysia with Curlec.

As the COO, Kothari will further develop Razorpay into a customer-centric organisation, ensuring a seamless customer experience for various customer segments and businesses. His role also involves guiding the company’s business strategies to achieve sustained and exponential revenue growth in India and Malaysia.

He will focus on identifying new opportunities to enhance the customer experience and streamline internal systems, processes, and business structures. Additionally, he will lead initiatives to strengthen partnerships with external stakeholders, positioning Razorpay as a leader in innovation in the ever-expanding ecosystem.

Earlier this year, Razorpay established an advisory board with former RBI deputy governor N.S. Vishwanathan as the chairperson. The board’s purpose is to enhance offerings, ensure better corporate governance, and promote compliance in India’s fast-evolving fintech landscape.

The advisory board also includes Arijit Basu, chairman of HDB Financial Services and former MD of State Bank of India; Aruna Sundararajan, IAS (Retd.) and former secretary of Ministries of Steel, IT & Telecom, GoI; and K. P. Krishnan, IAS (Retd.) and former secretary of the Ministry of Skill Development and Entrepreneurship.

With a team of 3,500 employees, Razorpay has been actively launching new products, forming partnerships, and acquiring companies in 2023. This year, the fintech unicorn introduced several new products including — MoneySaver, One Tap, OTP Less Checkouts, UPI Autopay on QR, and Optimizer – an AI-powered payments system. It also joined ONDC to offer payment reconciliation services for buyer and seller apps.

Razorpay also acquired Mumbai-based digital invoicing and customer engagement startup BillMe to offer businesses a hybrid model for better customer engagement.

Founded in 2014 by IIT Roorkee alumni Shashank Kumar and Harshil Mathur, Razorpay has raised close to $741 Mn to date from the likes of — Lone Pine Capital, Alkeon Capital, TCV, GIC, Tiger Global, Sequoia Capital India, Ribbit Capital, Matrix Partners, Salesforce Ventures, Y Combinator, and MasterCard.

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PB Fintech chairman and CEO Yashish Dahiya believes the second quarter of the financial year 2023-24 (FY24) was the last quarter when the company reported a loss and expects it to begin posting profits from Q3 onwards.

Dahiya made the comments during the company’s earnings call for Q2. PB Fintech, the parent company of Policybazaar and Paisabazaar, reported a loss of INR 21 Cr in the quarter ended September 2023, a decline of over 89% year-on-year (YoY).

“For me, the priority is always core business growth and then EBITDA. I’m very happy with our Q2 performance…I’m extremely confident that this will be our last quarter of losses. Next quarter we will definitely have profits,” Dahiya said during the company’s earnings call on November 6 (Monday).

The September quarter was also the third consecutive adjusted EBITDA-positive quarter for PB Fintech. Its consolidated EBITDA, excluding ESOP costs, stood at INR 13 Cr in Q2 FY24 as against an adjusted EBITDA loss of INR 53 Cr in Q2 FY23.

Revenue jumped 42% to INR 812 Cr in Q2 FY24 from INR 573 Cr in the year-ago quarter. Sequentially, it rose 22% from INR 665 Cr. Revenue from Policybazaar and PaisaBazaar, which are classified as core businesses, jumped 46% to INR 597 Cr in the quarter ended September 2023 from INR 410 Cr in the year-ago period. 

“We are very pleased with our core online business growth, especially health and term business growth…Our total insurance premium for the quarter is reaching an ARR of about INR 14,000 crore…Of our total online business, credit continues to contribute about 25% of total revenues,” Dahiya added.

The new insurance premium of health and term plans grew at 53% YoY. The fintech’s insurance premium for the quarter was INR 3,475 Cr with an ARR of INR 14,000 Cr. PB Fintech’s credit business under Paisabazaar also had a total loan disbursal of INR 16,500 Cr as of Q2 FY24.

“Credit business continues to grow very well, it has been EBITDA positive since December 2022…About 39 Mn customers have accessed our credit score platform and more than 75 of our disbursals are from existing customers,” Dahiya said during the call.

However, expenses continued to be a major headache for the company, rising more than 11% to INR 910 Cr in Q2 FY24 from INR 820.6 Cr in the year-ago period. Total expenditure jumped 18% from INR 768.4 Cr in Q1 FY24.

Shares of PB Fintech ended Monday’s session 3.2% higher at INR 724.80 on the BSE. After a rout on the bourses in 2022, similar to other new-age tech stocks, shares of PB Fintech are trading about 60% higher year to date.

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From the age-old barter systems to today’s snazzy fintech apps, India’s financial lending game has gone through a whirlwind of changes. Traditional lending has its nostalgic charm, but it was during the British colonial period that things got a bit more official. 

Fast forward to the 20th century, and we’re looking at a financial democracy in action with bank nationalisation. The 90s shook things up a bit more, welcoming private banks and NBFCs to the party. 

Now, in the 21st century, tech is the superstar, catapulting India’s fintech sector from a respectable $270 Bn in 2022 to a jaw-dropping anticipated figure of $1.3 Tn by 2030. And digital financing? It’s front and center, leading this transformation.

How Technology Reshapes Financial Lending?

Technology and society have always been interwoven, evolving together. Think back to the days dominated by paperwork and lengthy queues for loans. Yes, they’re getting a makeover, and the pandemic gave that a push. 

But it’s not just about giving old systems a fresh coat of paint. It’s a whole new world, with digital as the star. 

Here are some of the key factors boosting technology-based financial lending in India:

Growing Digital Adoption

Okay, we’re living in a digital wonderland now. More folks with smartphones, better internet, and even grandma is on video calls! Amidst this digital buzz, our government is pushing the digital dream hard. 

Just to throw some cool numbers at you: Aadhar has signed up 1.3 Bn of us, Digilocker is the go-to for over 13.7 Bn users, and UPI is playing ball with 376 banks. Seriously, 730 Bn in transactions!

Tech-Driven Foundation

India Stack, a cohesive set of APIs, has transformed digital interactions between lenders and platforms. Anchored by Aadhaar, eKYC, OCEN, Account Aggregator, and UPI, it ensures seamless, secure transactions. Imagine integrating RC (Registration Certificate) documents for automobiles and home loan registries into this system. 

Such advancements could significantly broaden the scope and impact of digital lending, especially for secured loans. 

Lenders Embrace Advanced Tech

India’s rise as a leading fintech market can be attributed to its swift embrace of technological solutions in lending. The pandemic, combined with government initiatives, bolstered the appeal of digital loans—known for their flexibility, rapid disbursal, and online accessibility. 

Seeking to cater to the evolving preferences of digital-native consumers, lenders have actively stepped up their technology budgets, optimising the lending journey across different lending products.

Streamlined Underwriting With Analytics

Digital lending leverages automated underwriting and big data analytics. Lenders employ advanced algorithms to swiftly assess data like credit history and income, ensuring rapid and accurate decision-making. 

With analytics, they delve into borrowers’ data, from spending habits to social media, offering tailored loan terms and competitive rates.

Efficient Loan Processes: Say goodbye to waiting periods. Digital platforms are now like those efficient baristas—quick, precise, and no fuss! Repaying loans? A breeze, thanks to snazzy payment systems.

Elevated Customer Interaction: It’s the age of the digital concierge. Your loan details, slick interfaces, timely nudges—all at your fingertips. Got a question? Chatbots are the new 24/7 helpline, making sure you’re always in the loop.

Challenges In The Modern Financial Lending Landscape

While we’ve made some groundbreaking strides in our digital journey, there’s still a stretch of road ahead with a few hurdles. Despite the game-changing effects of UPI and the visionary India Stack initiative, about 190 Mn Indians are still on the sidelines, awaiting full financial inclusion. 

The digital divide becomes even more evident in remote regions. For many, the absence of a robust credit history remains a significant barrier in their financial journey.

Navigating the regulatory framework presents its own set of intricacies. While these regulations are crafted with the noble intent of maintaining integrity and fairness in the financial ecosystem, mastering this labyrinth isn’t always straightforward. 

There’s an ongoing challenge to find that sweet spot between streamlined processes and comprehensive due diligence. And let’s not forget about the realm of informal lending—it still looms large, with its unique challenges, notably concerning fair interest rates and associated risks.

The Road Ahead

While mature markets like the US are seeing digital credit cool off a bit, India’s charting its own epic story. Fintech startups are at the forefront, and each innovation is a plot twist. We’re not just tweaking things; we’re gearing up for a monumental shift. 

As tech and smart regulations become the dynamic duo, we’re looking at not just a digital tomorrow, but a transformative one. Buckle up; the future is going to be a wild ride!

The post The Evolution And Revolution Of Financial Lending In India appeared first on Inc42 Media.

PB Fintech, the parent company of insurtech platform Policybazaar, saw its net loss decline over 89% year-on-year (YoY) to INR 21 Cr in the quarter ended September 2023. The company had reported a net loss of INR 187 Cr in the second quarter (Q2) of the financial year 2022-23 (FY23). 

However, net loss widened from nearly INR 12 Cr in Q1 FY24.

Revenue jumped 42% to INR 812 Cr in Q2 FY24 from INR 573 Cr in the year-ago quarter. Sequentially, it rose 22% from INR 665 Cr. 

Revenue from Policybazaar and PaisaBazaar, which are classified as core businesses, jumped 46% to INR 597 Cr in the quarter ended September 2023 from INR 410 Cr in the year-ago period. 

Meanwhile, expenses continued to be a major headache for the company, rising more than 11% to INR 910 Cr in Q2 FY24 from INR 820.6 Cr in the year-ago period. Total expenditure jumped 18% from INR 768.4 Cr in Q1 FY24.

Employee benefits and advertising expenses accounted for the biggest chunk of expenditure. Employee-related costs stood at INR 422.84 Cr and marketing costs at INR 247.35 Cr during the quarter under review. Together, the two accounted for nearly 73% of the total expenses. 

It was the third consecutive adjusted EBITDA-positive quarter for PB Fintech. The consolidated EBITDA, excluding ESOP costs, stood at INR 13 Cr in Q2 FY24 as against an adjusted EBITDA loss of INR 53 Cr in Q2 FY23. The metric, however, declined 43% quarter-on-quarter (QoQ) from INR 23 Cr. 

Even as it targets breakeven by FY24 end, employee stock option plan (ESOP) cost the company a hefty INR 102 Cr in Q2 FY24. The number, however, was up 2% QoQ and down 54% YoY.

Meanwhile, the startup said the adjusted EBITDA of its core businesses improved to INR 68 Cr in Q2 FY24 from INR 12 Cr in the year-ago period. 

Policybazaar clocked insurance premiums worth INR 3,475 Cr in Q2 FY24, up from INR 2,545 Cr in Q2 FY23. 

Meanwhile, credit business Paisabazaar also continued to scale, disbursing loans worth INR 4,139 Cr in Q2 FY24, up 41% from INR 2,922 Cr in Q2 FY23. The lending arm’s annualised run rate for disbursals stand at INR 16,500 Cr, while it is on path to issue 6 Lakh credit cards on an annual basis. 

“Credit business continues to grow very well and has been adjusted EBITDA positive since December 2022. We are now at the annualised run rate of INR 16.5K Cr disbursal and about 6 Lakh credit card issuance on an annualised basis. We added about 2.24 Mn new consumers who accessed their credit score through our platform in Q2 FY24, bringing our total credit score consumer base to 39 Mn,” the company said. 

PB Fintech Fires On All Cylinders

PB Fintech’s new initiatives vertical, which include seller aggregator platform PB Partners and the UAE business, reported a revenue of INR 215 Cr in Q2 FY24 as against INR 164 Cr in Q2 FY23. 

EBITDA loss for the vertical improved to INR 55 Cr during the quarter ended September 2023 from INR 65 Cr in the year-ago period. 

PB Fintech also noted that its UAE premium grew by 2.5X YoY.

Meanwhile, the company reiterated its focus on new initiatives arm, noting that it continues to strengthen leadership in the vertical while building further efficiencies. The company also claimed that the agent aggregator platform continues to lead the market in scale and efficiency of operations.

Elaborating further, the fintech major said that the new initiatives vertical has ‘increasingly’ moved its business  towards ‘smaller and higher quality advisors.’ PB Fintech added that the vertical accounts for the highest proportion of non-motor business and has a presence in 16,300 pincodes across the country. 

The post Policybazaar Parent PB Fintech’s Q2 Loss Declines 89% YoY To INR 21 Cr appeared first on Inc42 Media.

Fintech SaaS startup Perfios has appointed Sumit Nigam as chief technology officer (CTO) and Anu Mathew as chief people officer (CPO) as part of its initial public offering (IPO) plans.

The startup said the leadership appointments are part of its strategic preparation for its public listing over the next 18-24 months. 

Nigam, who assumed the role of CTO in July, has over two decades of experience in technology leadership. Nigam earlier worked with organisations like BigBasket, Walmart Global Tech, Informatica, and Dell EMC. 

In his new role, he will be instrumental in guiding the startup’s technological advancements with a focus on enhancing its comprehensive suite of SaaS products, Perfios said in a statement.

Meanwhile, Debashish Chakraborty, cofounder of Perfios who served as CTO for 15 years, will now transition to a more strategic position within the company while retaining his board membership. In his new capacity, he will offer counsel on technology initiatives and provide guidance to the tech team led by Nigam.

Commenting on his appointment, Nigam said, “I am thrilled to become a part of Perfios’ journey at this crucial juncture. Perfios has been at the forefront of numerous innovations in the fintech space, and there are vast opportunities for bringing in the next set of disruptions that can empower our customers in different ways…” 

On the other hand, Mathew’s career spans over two decades, marked by her successful scaling of startups and tenure with global organisations. She has previously worked with Pine Labs, QwikCilver, HCL, and GE.

Having lived and worked in both India and England, Mathew brings extensive experience in building global teams and collaborating with founders and leaders to create high-growth, sustainable organisations with a positive team culture, the statement said.

Founded in 2008 by VR Govindarajan and Chakraborty, Perfios is a B2B and B2C startup that provides software solutions to financial institutions for credit decisioning, analytics, onboarding automation, due diligence, among others. The startup has a presence in 18 countries and works with over 1,000 financial institutions. It offers over 75 products and platforms and over 500 APIs.

Last month, the startup raised $229 Mn in its Series D funding round from Kedaara Capital in a mix of primary and secondary sale.

Earlier this month, Perfios conducted ESOP buyback worth INR 154 Cr, which, it said, created 62 millionaires.

In September this year, Perfios acquired Chennai-based open finance platform Fego.ai. Prior to that, Perfios acquired Karza Technologies in 2022 and FinTechLabs in 2019.

The post Fintech SaaS Startup Perfios Appoints CTO, CPO As Part Of Its IPO Plans appeared first on Inc42 Media.

Fino Payments Bank’s consolidated profit after tax (PAT) jumped 41.5% year-on-year (YoY) to INR 19.5 Cr in the second quarter (Q2) of the financial year 2023-24 (FY24) on the back of strong growth in transactions and user base. The payments bank had reported a PAT of INR 13.8 Cr in Q2 FY23. 

Sequentially, the company’s net profit increased 4.3% from INR 18.7 Cr. 

The payments bank’s revenue increased 18.2% to INR 358.6 Cr in Q2 FY24 from INR 303.3 Cr in Q2 FY23. On a quarter-on-quarter (QoQ) basis, revenue rose nearly 3% from INR 348.3 Cr in Q1 FY24. 

Meanwhile, expenses continued to rise largely on the back of ‘other operating expenses’. Fino Payments Bank’s total expenditure, excluding provisions and contingencies, grew 16.9% to INR 338.50 Cr in Q2 FY24 from INR 289.5 Cr in the year-ago period. 

While ‘other operating expenses’ soared more than 15% YoY to INR 275.6 Cr in the quarter ended September 2023, employee benefit expenditure also saw a marked rise of more than 15% YoY to INR 44.05 Cr in the quarter under review. 

Speaking to Inc42, Fino Payments Bank’s chief financial officer (CFO) Ketan Merchant said that product costs coupled with ecosystem challenges, including the Aadhaar Enabled Payment System (AEPS) chargeback costs, added to the expenditure. He, however, expects operational leverage to kick in to offset these challenges. 

The Fino CFO also added that the company continues to be agile, focussed on the variablised cost model and is running a tight ship to manage costs. 

Meanwhile, earnings before interest, taxes, depreciation, and amortisation (EBITDA) zoomed 51.4% on a yearly basis to INR 46.2 Cr in Q2 FY24. 

“Our performance in the first half of the fiscal has been in line with our expectations wherein on the back of digital push we have registered another record on throughput of ~ INR 1.62 Lakh Cr…Our focus on profitability is driving PAT margin upwards from 4% in H1 FY23 to 5.4% in H1 FY24…,” added Merchant. 

Merchant further added that the payments bank is ‘committed’ towards achieving a growth rate of nearly 20% in revenue going forward and will continue to enhance its digital presence. 

Merchant also said that the payments bank is ahead of the curve in terms of digital adoption compared to its peers.

Meanwhile, the company confirmed that it plans to apply for the planned small finance bank (SFB) licence by the end of the current year.

On the operational front, Fino reported an overall throughput of INR 86,568 Cr in Q2 FY24, up 43% YoY, while digital throughput soared 120% YoY to INR 23,051 Cr during the quarter. Interestingly, digital throughput accounted for 27% of overall throughput in Q2 FY24, up from 17% in Q2 FY23.

The payments bank also logged nearly 37 Cr UPI transactions, accounting for 1.25% of the overall ecosystem count. 

It also deepened its distribution network as the number of merchants registered on the platform soared 23.4% YoY to 15.1 Lakh at the end of September 2023. In addition, 15.4 Lakh bank accounts were opened in the first six months of the current financial year so far.

With overall current customer base hovering around the 90 Lakh mark, the payments bank opened nearly 50,000 digital accounts in the quarter. 

At the end of the quarter, the total number of CASA (current account.savings account) stood at 90.6 Lakh while product mix substantially improved in favour of high margin products such as CASA and CMS. The two main products – CASA and CMS – accounted for 30% of Fino’s total revenue in Q2 FY24.

Average deposits zoomed 53% YoY to INR 1,267 Cr in Q2 FY24 compared to INR 830 Cr in Q2 FY23.

Shares of Fino Payments Bank closed 2.21% higher at INR 305.30 on the BSE on Wednesday (November 1).

The post Fino Payments Bank’s Q2 PAT Zooms 41% YoY To INR 19.5 Cr appeared first on Inc42 Media.

The Securities and Exchange Board of India (SEBI) has imposed a penalty of INR 1 Lakh on Paisabazaar Marketing and Consulting, a subsidiary of PB Fintech, for appointing a principal officer without requisite certification.

“Naveen Kukreja who was appointed as principal officer of Noticee (Paisabazaar), had not obtained the National Institute of Securities Markets (NISM) level 2 series XB certification as on 30/6/2023. Thus, it was observed that he did not have the requisite certification requirement as specified in Regulation 7(2) of IA regulations,” SEBI said in an order.

Kukreja is the cofounder and CEO of PB Fintech’s lending vertical Paisabazaar.com. 

As per the regulations, an individual investment adviser or principal officer of a non-individual investment adviser, registered under these regulations and persons associated with investment advice, shall have a certification on financial planning or fund or asset or portfolio management or investment advisory services either from NISM from any other organisation or institution, including Financial Planning Standards Board of India.

“After taking into consideration the nature and gravity of the violations… as well as considering the aforementioned mitigating factors, I… hereby impose a minimum penalty of 1,00,000 (Rupees One Lakh Only) on Noticee i.e. Paisabazaar Marketing & Consulting Pvt Ltd,” adjudicating officer Soma Majumder said in the order.

If the company fails to pay the fine within 45 days of the receipt of the order,  the markets regulator might initiate “consequential actions”, the order said.

The matter dates back to more than a year ago. BSE Administration and Supervision Ltd  (BASL) conducted the inspection of Paisabazaar for a period between April 21, 2021 and August 31, 2022 in November last year.

The findings of the inspection were sent to Paisabazaar and the company responded to it. However, following the inspection of the finding and the company’s response, it was observed that Kukreja was in violation of the regulations. 

Following the issue of a show cause notice, Paisabazaar claimed that the Covid-19  pandemic restrictions made it difficult for Kukreja to ensure compliance with the regulations. It also said that Kukreja successfully obtained the requisite certification as on September 13 this year and was in full compliance with the regulations.

Considering all the factors into consideration, the markets regulator found Kukreja in violation of the required compliance and levied the fine.

It must be noted that Paisabazaar witnessed impressive growth in the last three reported quarters. In Q3 FY23, the business achieved break-even on an adjusted EBITDA level.

In Q1 FY24, Paisabazaar registered a 53% year-on-year (YoY) growth in loan disbursal and a 47% YoY rise in credit card issuance.

The post SEBI Penalises Paisabazaar For CEO’s Past NISM Certification Lapse appeared first on Inc42 Media.

Fintech giant Paytm has become the official sponsor for the ongoing 37th edition of the National Games, being held in Goa.

Prime Minister Narendra Modi inaugurated the tournament at the Jawaharlal Nehru Stadium in Fatorda, South Goa.

Besides the sponsorship, Paytm said it has also become the exclusive mobile payments partner for the Goa government for its digitalisation endeavours. The Vijay Shekhar Sharma-led company would introduce QR codes, soundbox, and card machines in multiple government departments, including panchayats and municipalities, in the state.

Commenting on the sponsorship deal, Abhay Sharma, chief business officer of payments at Paytm, said, “We are excited to be the official sponsor for the National Games in Goa. As pioneers of mobile payments in India, we have been working towards our mission to bring half a billion Indians into the mainstream economy. From our leadership in in-store payments, empowering merchants with digitalisation of their business to enable users with seamless and accessible payments, we are championing Digital India.”

The 37th edition of the National Games is being held from October 26 to November 9. It involves over 10,000 athletes from across the country competing in 43 sports disciplines at 28 venues.

The National Games, styled after the Olympics, will feature the participation of 28 states and 8 union territories.

Sports events, with their high viewership, provide companies a good opportunity to build mindshare through advertising and sponsorship deals. Reliance Industries Ltd, which released its financial results for the quarter ended September on Friday, credited sports for the growth of its OTT platform JioCinema. 

While startups are known to spend big on advertising for rapid growth, sporting events, especially related to cricket, are preferred by them for splurging on promotions.

Despite the funding winter wreaking havoc in the Indian startup ecosystem, the Indian Premier League (IPL) this year saw at least 19 startups, including Paytm, sign sponsorship deals.

Earlier this year, the Board of Control for Cricket in India (BCCI) also announced fantasy gaming unicorn Dream11 as the Indian cricket team’s new lead sponsor. 

Meanwhile, Paytm, earlier this month, reported a 49% year-on-year decline in its consolidated net loss at INR 291.7 Cr for the quarter ended September 2023. Operating revenue jumped 31% to INR 2,518.6 Cr on the back of strong growth in payments and financial services business.

The post Paytm Becomes Official Sponsor For 37th National Games appeared first on Inc42 Media.

There seems to be no end to the top-level exits at fintech unicorn BharatPe, as its chief product officer Ankur Jain has stepped down after a stint of over three years.

Jain, a former executive at Walmart Labs, assumed the role of CPO at BharatPe in June 2020. He was responsible for overseeing the entire product life cycle and driving innovation within the company.

“We would like to confirm that Ankur Jain has decided to move on from BharatPe to pursue his entrepreneurial ambitions. He has been an integral part of the company’s journey over the last 3.5 years and has built and led a super talented team that brought to life disruptive fintech products for merchants and consumers,” a BharatPe spokesperson said.

“We are in the process of looking for a seasoned product leader to take over this role and will be making a formal announcement on the same soon,” the spokesperson added.

The development was first reported by Entrackr.

Jain will reportedly launch his own startup in the AL-ML segment.

Earlier this year, Dhruv Dhanraj Bahl, former chief operating officer (COO) of BharatPe, who was later appointed as the chief business officer for the merchant lending division, also quit the fintech startup.

BharatPe, which has been embroiled in a highly-publicised legal battle with its former managing director Ashneer Grover, has been seeing an exodus of senior executives since last year.

The fintech unicorn has seen a number of exits since last year, including chief technology officer Vijay Aggarwal, head of consumer product-PostPe Nehul Malhotra, chief product officer of lending and consumer products Rajat Jain, and vice president of technology Geetanshu Singla. In January, its chief executive officer Suhail Sameer also stepped down.

Founded in 2018, BharatPe enables merchants to accept online payments via QR codes and PoS devices. The fintech unicorn also expanded into the buy now pay later segment last year. BharatPe has raised nearly $580 Mn till date and competes with Paytm, PhonePe, among others.

Last valued at $2.9 Bn, the fintech unicorn’s list of investors includes Tiger Global, Dragoneer Investment Group, Steadfast Capital, Coatue Management, Ribbit Capital, Insight Partners, Steadview Capital, Beenext, and Amplo..

It reportedly clocked a record gross revenue of $23.5 Mn (about INR 195 Cr) in August this year. This translates to an annualised revenue rate of $282 Mn (about INR 2,340 Cr).

The growth was attributed to enhanced revenue from lending business and the successful introduction of new initiatives.

The fintech unicorn’s net loss skyrocketed 3.4X to 5,610.7 Cr in the financial year 2021-22 (FY22) from INR 1,619.2 Cr in FY21.

The post Top-Level Exits Continue At BharatPe; Now, CPO Ankur Jain Quits To Launch His Own Venture appeared first on Inc42 Media.

Our dependency on internet services has increased dramatically as the digital era has progressed and technology has become more integrated into our daily lives. From financial transactions to accessing sensitive personal information, the digital domain provides unprecedented convenience and efficiency. 

Nonetheless, this digital transformation has spawned a significant challenge: the growing risk of deception. To address this critical issue, it is imperative for India to re-evaluate its reliance on one-time passwords (OTPs) and transition to a more secure and user-friendly authentication system.

The Digital Revolution In India

There has been a significant shift towards digital culture in India in recent years. The pervasive adoption of digital payment systems, especially the Unified Payments Interface (UPI), has fueled the nation’s economic expansion. 

Experts predict that by 2026, the total value of digital payments in India will reach a staggering $10 Tn. This digital transformation has unquestionably brought numerous benefits, but it has also opened the door to new challenges, most notably an alarming increase in fraud enabled by obsolete technologies such as one-time passwords (OTPs).

Understanding OTPs

OTPs, or one-time passwords, have become an integral element of the online experience in India. Typically, these temporary, randomly generated codes are sent to users via Short Message Service (SMS) to verify their identity during various online activities, including logging into bank accounts, undertaking secure transactions, and accessing sensitive data. 

OTPs are considered a type of two-factor authentication (2FA) and have been extensively adopted in a variety of industries, including banking, social media, peer-to-peer payment platforms, healthcare portals, and ecommerce websites.

Limitations Of OTPs

While OTPs have played a crucial role in bolstering security, they come with their own set of limitations and vulnerabilities that pose a significant risk:

• Account Takeover Fraud: OTPs, especially those delivered via SMS, are susceptible to interception through SIM swap fraud. Cybercriminals can exploit this vulnerability to gain unauthorised access to users’ accounts, even if they possess the correct password. This method effectively turns a security measure into a tool for fraudsters.
• User Experience Challenges: OTPs often introduce friction into the user experience. Waiting for OTPs to arrive, manually entering codes, and dealing with unreliable SMS deliveries can lead to a frustrating and time-consuming login process, discouraging users from engaging with online services.
• Security Risks: Despite their intended purpose, OTPs do not provide foolproof security. They can be susceptible to phishing attacks, where users are tricked into revealing their OTPs. Additionally, OTPs can be reused or intercepted by malicious actors, compromising the authentication process.

The Case For Going Passwordless

Given the inherent vulnerabilities and user experience challenges associated with OTPs, it is imperative to explore more advanced and secure authentication alternatives. Many leading companies have already recognised the need for a passwordless future, and here’s why:

• Enhanced Security: Passwordless authentication methods offer a higher level of security compared to OTPs. Deterministic authentication through a mobile device, for example, requires the user to have physical possession of their mobile device, making it significantly harder for fraudsters to gain unauthorised access.
• Improved User Experience: Passwordless authentication simplifies the login process, eliminating the need for users to remember complex passwords or deal with OTPs. This streamlined approach enhances user convenience and encourages greater engagement with online services.
• Cost-Effective: Businesses often incur expenses related to password resets and OTP support services. Passwordless authentication reduces the reliance on these costly processes, saving both time and resources.
• Versatility: Passwordless authentication methods can be seamlessly integrated across various channels, including mobile, desktop, and call centers. This versatility ensures a consistent and secure authentication experience, regardless of the user’s chosen platform.
• Fraud Prevention: By eliminating the vulnerabilities associated with OTPs, passwordless authentication makes fraud a less scalable and costly endeavor for cybercriminals. This added layer of security protects both businesses and users from account takeover and unauthorised access.

Incorporating Advanced Authentication

In the evolving realm of passwordless authentication, cutting-edge solutions are reshaping the way we verify identity. Biometrics, such as fingerprint and facial recognition, offer a secure and convenient means of authentication. 

Magic Links, featuring single-use verification tokens, simplify the login process by eliminating the need for passwords altogether. Hardware keys, like USB devices, provide an extra layer of security for user authentication. 

Additionally, QR code verification offers a seamless and secure alternative to password-based logins. These advancements are underpinned by sophisticated technology that restructures sensitive data and decentralises access through techniques like tokenization and encryption, enhancing both security and user experience.

The Way Forward

India must reassess its dependence on vulnerable OTPs and embrace passwordless authentication. The rapidly evolving digital landscape necessitates adaptive security measures. 

Passwordless authentication offers a secure, user-friendly, and cost-effective solution, enhancing online safety and user experience. It’s time for India to join the global shift towards combating fraud effectively with this innovative approach, empowering users in the digital age.

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