Fintechs must build collection muscle to scale lending business: Cred founder Kunal Shah
Cred founder Kunal Shah said fintech startups focusing on
small-ticket lending
must invest in collection capabilities to ensure repayments from defaulters and build sustainable businesses.
Speaking at the
Bharat Inclusion Summit
hosted by IIMA Ventures, Shah said many companies had misdiagnosed the problem. 'When it comes to mass-market lending, the issue is not demand but collections. If you're offering loans to people below a certain income level, there's unlimited potential to disburse. But the real challenge lies in getting the money back,' he said.
'Digital companies must focus more on collections than demand—India is credit-hungry, so the problem isn't disbursal but recovery,' he added.
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Shah stressed that fintech founders are essentially in the business of trust, irrespective of the category. 'If you're building in fintech, you're building trust. That's the foundation for anything to work efficiently.'
Bengaluru-based Cred, which began as a credit card bill payments platform, has since expanded into
unsecured lending
, insurance distribution, and secured credit products. Last month, it launched loans against mutual funds—one of its first secured lending offerings.
ET had reported in June 2024
about the company's plans to enter this space.
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In an interview in February
, Shah told us that such products deepen trust with users and help unlock more revenue opportunities.
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ET reported on April 14
that Cred has held talks to mop up $100–200 million, largely from its existing investors, at a reduced valuation of $4 billion, a cut of more than 30% from 2022 when it last raised funding.
The Peak XV Partners-backed startup has also invested in NewTap Technologies, which owns a stake in NewTap Finance, a non-banking finance company (NBFC) promoted by Shah.
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