Parul
A Singapore-based microfinance company plans to open an office in India next year with focus on the unbanked market and farmers. MicroMoney International, which has raised USD 10 million earlier this month, is seeking a foothold in India’s microfinance business, a business still trying to move beyond the big lenders.
The two-year old company’s focus is on farmers with loans in rupees. ‘We are working on reaching out to the Indian market,’ said Anton Dzyatkovsky, MicroMoney International’s co-founder.
Loans will be in rupees, but the firm has raised capital by issuing its own digital currency – AMM tokens. An initial coin offering (ICO) is a way start-ups raise capital in crypto coins like Bitcoin and Ethereum, often creating their own digital money called tokens that gets used like a discount coupon for its own product.
However, Indian regulators consider ICOs highly speculative investments.
‘India has been a micro-lending hot spot for over a decade as one of the big four emerging markets that also includes Brazil, Russia and China. And has a large informal and rural economy in need of funding,’ said Dzyatkovsky.
Government policies – including doing away with large rupee notes – have made it harder for individuals to be fully informal. Most have opted to register as legal entities and are opening bank accounts.
It is unclear whether or not this has been a boon to microlending financial institutions, but everyone thinks digitisation in India is an opportunity to lend smaller borrowers, he observed.
MicroMoney’s average loan will be Rs 19,500, at least during the initial stage. All certification of accounts is done through the app.
In April, Unicorn India Ventures led a half-a-million dollar investment round in Bengaluru-based microlending startup SmartCoin. Comparatively, Unicorn’s short-term loans range from Rs 1,000 for two-week credit lines to up to Rs 50,000 for three- month credit lines, he pointed out. Microlending customers, also known as the “unbanked” in industry parlance, tend not to have any credit profile.
A number of Indian banks have microlending programmes, building the credit standings of their mostly rural customers.
