Arun Kumar Nayyar, CEO, NeoGrowth Credit – Top 100 Fintech for SDG Influencer

This article features an interview with Arun Kumar Nayyar, CEO at NeoGrowth Credit, one of our Top 100 Fintech for SDG Influencers.

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Arun Kumar Nayyar

This article features an interview with Arun Kumar Nayyar, CEO at NeoGrowth Credit, one of our Top 100 Fintech for SDG Influencers.

1. Tell us more about what you do and how your role or project is making an impact. How do they support the SDGs?

NeoGrowth Credit Pvt. Ltd is a Systemically Important, Non-Deposit taking NBFC and a pioneer in SME lending based on the underwriting of digital payments data. The Company offers unsecured loans to merchants who accept credit/debit cards and/or other digital payments from customers using its proprietary technology platform. NeoGrowth loans are short-term and hassle-free with the facility of daily repayment; a key customer delight factor. At the heart of NeoGrowth business strategy is a mission to have a positive social impact on the financial lives of small and medium business merchants across India, more than 50% of whom are creditworthy but until now have been excluded from accessing loans based on traditional underwriting methods. Our key objective behind NeoGrowth has always been to create a strong positive social impact on the Micro, Small & Medium Enterprises (MSME) sector and we have been successfully doing that by lending to first generation entrepreneurs, assisting women entrepreneurs and enabling our MSME customers to create more jobs and improve their credit scores via our loans.

During the FY2017-18, 14% of the total disbursements by NeoGrowth were towards businesses that were run by women either as sole proprietors, partners or directors. Additionally, from our Social Impact studies conducted by an independent third-party consulting firm, it was found that there was 15% increase in the number of females employed by merchants after taking a loan from NeoGrowth. Thus, our lending activity results in stimulating action and shaping the way for Gender Equality – Goal 5 of the 2030 Agenda for Sustainable Development. Besides this, NeoGrowth also measures its impact on lending to borrowers with lower education background who do not have a formal degree and face challenges in availing business loan. During our Social Impact measurement activity, we found that around 28% of the enterprises who were financed by NeoGrowth during the FY2017-18, had applicants that did not hold formal education degrees. This lending activity to lower educational background groups fosters innovation and encourages entrepreneurship, even among those who may not possess inclusive and qualitative education, thus promoting Goal 9 of the 2030 Agenda for Sustainable Development: promoting sustainable Industrialization, fostering Innovation and building Infrastructure.

2. Why do you see Fintech and/or Blockchain in particular as an important enabler in creating a social impact?

According to Omidyar-BCG Report 2018 on Digital MSME Lending, total MSME credit demand for 2018 is estimated to be USD 600 billion. Out of this, roughly 40% (~USD 240 billion) is unmet demand from the informal credit sector. This presents a huge untapped market opportunity for both traditional lenders and fintech players. In fact, it has become imperative for traditional banks and Financial Institutions to collaborate with fintech firms across all stages of the customer loan lifecycle to manage the cost levers as well as to digitize their lending processes to improve customer journey, engagement and retention. This collaboration is not only helping assess a borrower better through sophisticated underwriting algorithms but also improving the outreach thereby leading to financial inclusion. Emerging technologies like Voice AI, Machine Learning, Big Data and Blockchain are finding immense use cases in the financial services globally.

3. What are some challenges you face along the way?

The whole NBFC sector is still facing problems in fresh fund-raising post IL&FS crisis. Although it has impacted liquidity in market, we have been able to cushion ourselves from these headwinds through health mix of borrowing from domestic and overseas lenders to ensure ongoing needs for disbursements. On the operational side, collection is a challenge which is quite common in Indian market but unique from global perspective. For our retail products, we focus on daily repayments to ensure merchant is not burdened with large cash flows during turbulent times. This is a win-win for both the company and the customer.

4. What more do you think is needed in the ecosystem to support and facilitate creating a greater social impact?

The ecosystem should develop a deeper understanding of the customer segment and come up with lending schemes unique to fintech.  This is because the customer segments within MSMEs that fintechs cater to, are very different from the traditional SME customers where incumbent financial institutions already have product offerings. In addition, we also need a stable regulatory framework and digital roadmap for such businesses.

5. What do you hope to see or achieve in 10 years’ time?

At NeoGrowth, we have set aggressive targets for ourselves going forward. Presently, we have offices in top 21 cities of the country, where we visualize a remarkable growth in acceptance of digital payments. We will continue with our expansion plans into these markets and keep innovating to come up with better solutions to help the SME segment in the best possible manner. Besides, NeoGrowth will continue to focus on creating a strong positive social impact on MSMEs by lending to first generation entrepreneurs, assisting women entrepreneurs and enabling our customers in job creation and improvement of credit scores via our loans. In the next 5 years we aim to cross USD 1 billion in AUM; in other words, build a billion-dollar balance sheet.

This interview is part of a series of interviews featuring Fintech influencers who are doing work that advances our efforts in achieving the Sustainable Development Goals.

LATTICE80, in collaboration with FinTech4Good, presents the complete list of Top 100 Fintech for SDG Influencers who are leveraging the power of fintech and blockchain technology to create a positive impact on the future. LATTICE80 is launching our accelerator programme based in Hong Kong to help SDG-focused startups build blockchain solutions. Are you a SDG-focused startup? Click here to indicate your interest.

Disclaimer: The interviews are published on a rolling basis and the order by which they are published by no means representative of any rankings.