The China-based lending platform Qianli Technologies (钱粒科技) plans to enter India in partnership with one of India's micro-lending platform that provides short-term loans to students in India.
The Indian company did not wish to be named in the story.
Qianli plans to disburse around Rs.100 crore (USD 13 million) within a year of its operations in India. It said the average loan size would be between Rs.5,000 to 20,000. As student loan is the Indian company's forte, Qianli will aid its India partner with their loans service for professionals—a product they are known for in China.
Speaking to The Passage, Qianli officials said that the Hangzhou-based company will take 3-6 months to start its operations in India.
“There are a lot of behind-the-scenes operations that need to be orchestrated and settled before we start. It's tough for a Chinese fintech company to go to India market,” Qianli founder and CEO Peter Pan further explained.
Founded in January 2015, after gaining a stronghold in its home market, the company is now looking at India as the company believes that the market in India is quite open and without many players.
Qianli's India head Sharat Konatham revealed that the partnership with Indian firm is a strategic one as they have a huge experience with growing up in the India market.
“Although the Indian company started with student loans, they also cater to professionals and have a different offering. We are not looking at the student market. We are targeting the professional market,” Konatham said.
The lending market in India is dotted with home-grown startups such as CreditMate, Quicklo, Gyandhan and Slicepay that are banking on the abundant number of college students who do not have access to short-term loans. Moreover, a slew of Chinese companies have also entered India as the lending market in China is going through a crackdown post the tightening of rules by the Chinese government.
The total transaction value in the alternative lending space amounts to USD 241 million in 2018 and is slated to grow to USD 1,332 million by 2022. There were more than 158 new lending startups in India up to 2016, a PwC consulting firm report says.
In 2017, India received the largest share of Asia’s alternative lending deals at 41%. China was second at 32%, and Southeast Asia followed with 17% of total deals, according to CB Insights report.
"Moreover, it (the Indian company) would want to have such partners as they know there will be competition in this space. So, it's better to have their own base much wider even if it’s through partnering with other companies,” Konatham said.
According to Qianli founder, they are looking for a long-term partnership with the Indian firm as they also want to create a list of borrowers and work on providing them with alternative lending credit scores.
“Alternate lending space is very standardised in China. But in India, we don't have that kind of mechanism in the alternative lending space," Peter explained.
"Now the reporting can only happen when lending companies are working hand-in-hand and come up with innovative plans. For example, creating a blacklist of candidates and giving a score or alternate credit score to these borrowers, the lenders have to come together.”
According to Pan, the Indian lending market is much more eager to grow compared to other markets in South East Asia. However, to start with, its focus will be on Tier I and II cities.
“In China, it was easy as the language was uniform, and everybody is a smartphone user, even in Tier III cities. That is not the case in India. If we want to target Tier III in India, we will have to come up with a multi-lingual solution. We are not there yet,” Konatham noted.
Qianli plans to hire an all-local team for its India operations. Konatham explained that lending being a social game, it’s important to have a team that understands local nuances.
“You have to know how people are thinking. While the Chinese team will bring its industry experience, India team will bring the operational experience. That is why we are keen to have a local team here,” Peter said.
_ Note: The article initially mentioned the name of the partnering firm. However, due to the request from the concerned company to remove their name, changes have been reflected.