Navi emerges as one of the leading consumer lenders during the pandemic

More than a month ago, Sachin Bansal claimed that Navi would soon be among the top three loan apps in the country. And it looks like his request came true. By being one of the few lenders providing loans to low-income groups during the pandemic, Navi has now become one of the leading lenders.

According to three Coach sources, Navi has disbursed loans worth more than Rs 130 crore since his May launch this year, an entire amount given since the start of the pandemic.

“Navi has disbursed loans to over 40,000 to 45,000 people in the past four months,” a person familiar with the company’s internal data said, speaking on condition of anonymity. While Navi offers loans in the range of Rs 10,000 to Rs 500,000, this person said that the average loan size at Navi hovers between Rs 30,000 and Rs 35,000.

According Entrackr’s research, only a handful of consumer credit companies extended loans to new customers while demand for credit among low-income groups increased several-fold due to job losses and severe erosion of income. This helped Navi speed up its scaling.

Another factor that played into this is their aggressive marketing which is visible when looking at the app download numbers. Data from Sensor Tower shows that Navi racked up 1.5 million downloads during the May-August period. Besides Navi, Dhani is another consumer lender that provided loans during this period. Dhani had over 7 million downloads during the same period.

“Navi and Dhani were the only two companies to market aggressively on Google and Facebook. Except for the two companies, no other consumer lending platform was actually lending to new customers,” said one of the top executives of a major consumer lending company. The person requested anonymity.

Navi declined to comment on the story.

If we look at the total loans disbursed by pure consumer lending platforms that largely lend through a mix of their own NBFCs and third-party lenders during the pandemic, Navi appears to be the top lenders to new borrowers along with Dhani .

“With the aggressive lending strategy, Navi has set plans to achieve a loan book worth Rs 600-700 crore by the end of July-August next year. This would definitely put the company in the top three lending apps after KreditBee and MoneyTap,” the second source cited in the article said.

Even though Navi has been a new player in the lending space, the company gained in-depth knowledge about the business through Chaitanya. Navi acquired Chaitanya Rural Intermediation Development Services Private Limited or CRIDS in December last year and later renamed it Navi Finserv.

CRIDS has been providing loans to low income groups since 2012. It knows the finer details of lending activities and has a strong presence in states like Karnataka, Jharkhand, Bihar, Maharashtra and Rajasthan.

This experience has helped Navi mitigate risk and process transactions quickly. With CRIDS’ lending experience, Bansal’s deep pocket and understanding of technology, Navi ticks all the boxes to claim a top spot in the consumer lending space.

Raising capital against equity and debt (with banks) for non-bank financial companies or the NBFC arm of the consumer lending platform would depend on the performance of the portfolio of loans under moratorium, ratings and the profitability.

“A significant portion of fintech companies are unlikely to meet the aforementioned parameters due to the pandemic and its impact on borrowers,” the second person quoted above said. “The potential inability to raise equity and take on debt would also work in Navi’s favor as it lent on its own.”

The true test of a lender is largely on collection and Navi has yet to complete the first cycle for over 95% of its loan portfolio. It has a loan repayment term ranging from three to 36 months. While Navi is certainly making a quick move into the consumer lending space, Bansal’s Navi Finserv also caters to two-wheeler, home, small business, and education lending. “Long term, Bansal’s horizontal loan game with Navi and his NBFC would be exciting to watch,” the first person quoted in the story said.

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