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EarlySalary CFO, CFO News, ETCFO

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 EarlySalary Cofounder CFO Ashish Goyal
EarlySalary Cofounder CFO Ashish Goyal

By Soham Shah and Mannu Arora

Pune-based digital lending startup EarlySalary is planning to achieve Rs 10,000 crore in loans in the next 12 months on expectations of strong credit demand, said its Cofounder CFO, Ashish Goyal. The instant loan app company, whose primary customers are salaried class (about 70%), disbursed loans worth Rs 5,000 crore by January 2022 since its inception in 2015.

The CFO does not see any material impact of interest rate hikes on his business, and also said that a framework in the works by the RBI for digital lenders is necessary to prevent harassment of customers. He expressed concerns that some constructs of Buy Now Pay Later (BNPL) credit products are morphing into “over-leverage” and “non-transparency”.

His statements came in the backdrop of RBI increasing interest rates by 90 bps since May to 4.9% after keeping a pause for two years to tame inflation and the regulator also considering a framework for digital lenders. Below are the edited excerpts:
Q: How do you see the impact of RBI rate hikes on your business?

Ashish Goyal: Given the global environment and inflation, rate hikes were imminent, and I expect some more rate hikes in the future. They are expected to rise to about 5.5-6% by the FY23 end. We expect some impact on our business in this environment. EarlySalary has always maintained the optimal mix between risk and return.

In the current environment, we will relook at our interest rate based on our cost of funds. We do not expect the increase in interest rate to adversely affect the overall business scenario including checkout finance products..

Q: RBI is considering a regulatory framework for digital lending. What are your expectations?

Ashish Goyal: I believe it is a significant step for addressing the issues and dealing with unauthorized digital lending platforms as cases of alleged harassment are increasing against operators of digital lending apps.

Q: BNPL product does seem to face increased scrutiny from RBI, and there is soon expected to be some stringent framework around it. What are your views?

Ashish Goyal: BNPL is in existence for a long time. We have had consumer durables, mobile phones, etc. available on EMI for quite some time. Similarly for a credit card also, where we buy today and pay later. However, some constructs of BNPL are morphing into over-leverage, and also non-transparency is a major concern here.

The RBI has reached out to market participants to understand and form their opinion on it. Our core focus is to provide affordability in a few identified segments by converting today’s purchases into multiple EMIs products. Currently, it is a very small but growing part of our portfolio. We continue to invest in this product.

Q: EarlySalary completed the milestone of Rs 5,000 crore loans in January of this year. What is the next milestone that you have your eyes set on? Also, do you see any major challenges on the asset quality front?

Ashish Goyal: We want to build a larger organization and stand tall in every customer’s mind and heart with a product for every credit need; we are a profitable start-up and want to build a large financial model.

By this year January, we disbursed 2.5 million loans worth Rs 5,000 crore and expect to achieve Rs. 10,000 crore in the next 12 months. We do not see any major challenges in asset quality..

Q: Do you see most of your loans coming from rural or urban India? What sort of markets you are looking at while you further expand?

Ashish Goyal: Traditionally, most of the demand comes from urban areas. Currently, we are available in 130 cities including metros and non-metros regions and our 40% of revenue comes from non-metro regions. We are planning to expand our business all over India.

Q: The pandemic has crushed incomes in India for quite a significant low strata population. Against this backdrop, what sort of trends have you seen across your products?

Ashish Goyal: The pandemic has affected every person’s life in one way or another. The silver lining for everyone is that the bounceback from there was swift and quick. Also, it resulted in a shift in digital payment and overall adoption of a digital way of living. With the digital way of servicing, the customer experience has become very critical. We have seen good demand for products post-COVID, especially in tier 2 and 3 cities.

Q: With Covid cases on the rise again, how lethal will the fourth wave of Covid be for your business?

Ashish Goyal: Now people have learned to live with Covid. Lending platforms have made it easier for everyone to complete their work at their fingertips. While it is tough to predict but we don’t see any significant impact on the industry due to the fourth wave of Covid.

Q: What are EarlySalary’s hiring plans in FY23?

Ashish Goyal: Currently our employee size is 300+. Our core focus is to provide best in class customer experience through automation and digital-first thinking. Having said that, we will continue to add resources to serve our customers.

Q: Is EarlySalary PAT profitable? What are your plans?

Ashish Goyal: It is very critical to build a profitable enterprise. EarlySalary is profitable at the PAT level. We are committed to building a strong scaled enterprise with profitability. We expect a significant uptick in our margins over the next 18 months.



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