Consumer lending startup MoneyTap has raised $9 million in a funding round led by Sequoia India. Existing investors NEA and Prime Venture Partners also participated in the round.
Founded in 2015 by Bala Parthasarathy, Anuj Kacker, and Kunal Varma, the platform provides credit to salaried employees and self-employed professionals through an app.
It is in talks to partner with six banks for this, apart from its existing partnership with RBL. The company had raised $3.3 million in an earlier round.
MoneyTap targets salaried individuals earning upwards of Rs 20,000 every month and evaluate within a few minutes if they’re eligible to avail a line of credit of up to Rs 5 lakh. The company uses a customer’s credit score, transaction history and other data that is fed into proprietary algorithms to decide on behalf of the bank if the borrower is a safe bet.
“We are uniquely placed wherein we sit on top of banks and NBFCs. After downloading our app a consumer can within five minutes know if they are eligible for borrowing credit. They can then complete the KYC formalities on their phone and can borrow any amount under the limit they are eligible for,” said Bala Parthasarathy, co-founder, and CEO of MoneyTap.
Comparing the concept to overdraft facility in banks, he explained: “Say you get approval for Rs1 lakh, but you don’t need to take it immediately. You take it and keep it in your app. There is no fee other than a small setting-up cost, until you take the money. But let’s say you urgently want Rs25,000 sometime three months later, you just have to swipe and the money will be transferred to your bank account.”
The service is aimed at borrowers who are underserved by traditional banks and lending institutions due to their poor or non-existent credit score, the company said.