India’s credit requirement is on a rise and this growing capital requirement is now supported by new growing models. Capita World is one such niche model among other existing lending models that partners with banks, NBFCs, investors and others, to reach out to fund seekers. Bhaumik Shah, national business head, Capita World shares with FPJ’s Jescilia Karayamparambil the company’s roadmap.
How did Capita World evolve?
We started Capita World in March 2015. Our three key promoters are (senior CA based out of Ahmedabad ) Vinod Modha, Jinand Shah and Aviruk Chakraborty.
Modha and Shah have been raising funding for corporates and also restructuring their whole funds. Both are known for this role. A few years back, they decided to enter the retail space. Keeping in mind the digital wave of the country, both of them decide to have a robust platform which can help the end customers in the best possible way. After conducting extensive research in the retail market, they recognised the gap in the lending space where customers have to go bank after bank and most of the banks have different requirements. Customer has to go through a lot of hardship before the loan is sanctioned. The idea was to make a platform where a customer can login and upload all their documents digitally.
After that we help them to connect with various bankers. That is the vision of Capita World.
How does Capita World operate?
He is were Chakraborty came in. He is an engineer and he got the artificial intelligence quotient into the system. Now, the key differentiator of Capita World is that it has a lot of algorithm that is run on machine learning concept. We did the pilot project on one of the European Bank’s data wherein we had 8 lakh data and out of that we had 20-odd data points on which we started doing the algorithmic test. This test was done to understand how accurate the machine learning was. Of the sample that was used for testing there was 98.5 per cent accuracy.
Capita World took two years’ time to launch the beta version, before launching it in October 2016. The operation and marketing started in February 2017. We got a good footfall in four cities of Gujarat–Ahmedabad, Vadodara, Surat and Rajkot. Overall response from Gujarat was been huge.
We are sitting on 7,000 leads which we have generated through various sources. We have got around 550 service providers registered with us. People like CAs (chartered accountants), company secretaries, financial intermediaries etc who are looking for some extra revenue, are our service providers. We have our own in-house digital, IT, R&D, CAs (knowledge team) and marketing team among others.
How have you divided your model?
We have divided our model into fund seekers, fund providers and service providers. Fund seekers are of two types— retail and corporate. Retail seekers are not related to equity but corporates are.
What is the lending limit?
We have sanctioned a loan as low as Rs 50,000 to a tea vendor and have gone as high as Rs 10 crore. In five months, we have got a sourcing of Rs 350 crore and got a sanction of Rs 15 crore. At present, we do not have a cap on the sanctioning.
What kind of awareness level do you see among the customers about debt instruments?
This is where our knowledge team steps in. They help our customer understand the intricate details and also, we have a concept of one form. This is an exhaustive form and it takes 20 minutes of a retail person and 45 minutes of a corporate. We use the data from the form in a format that the banker wants to see it in. We will extract the data and present it to the bankers. Through this form we are trying to reduce the turnaround time. It will increase efficiency and reduce human intervention.
How many banks and non-banking financial companies (NBFCs) have you partnered with so far?
We have with us 22 banks and NBFCs. We have partnered with all major private banks but we are looking at adding more 3-4 banks and
5-7 NBFCs. We are looking at a pool of 30 banks and NBFCs. This covers all the major options like affordable housing to biggest of the conglomerate requirements. At present, we are working with private banks but we are in talks with PSBs.
What is Capita World’s monetisation model?
We are not charging the customers but we are charging the banks and that is the model we follow. That is the concept that we would like to work on. We have a customer-centric approach, where banks give us the pay-out. It is estimated that banks incur 4-5 per cent of their entire revenue as marketing expenses. When they go through us they get more credible customers (due to our tech platform and processes in place).
The payout percentage from banks differ from bank to bank and product to product. The minimum payout is 0.3 per cent including GST and maximum that we are getting is 3 per cent excluding GST.
In the future, we do not want to rely on commission or payout model. We want anyone from financial intermediaries or a CAs to be using our platform as a service platform. They can log into their own files and the bankers can also access their files. Our future goal is to get into a business of software as a service (SaaS).
What will the role of CAs be here?
Today, around 80 per cent of the CAs are involved in the traditional activity –taxation. These people are not part of any financial management or funding raising. Maybe they have not done fund raising in their entire life as they were always focussed on taxation. These people audit for many clients and if their clients require credit they can come to us. The CAs will have access to all the details of the client and he can upload all their details with the client’s consent. After uploading, the CA’s job is over and we do the rest of the work. This also generates some remunerations for the CAs who are not into the financial management side.
What are your expansion plans?
We are targeting states like Maharashtra, Karnataka and Delhi NCR for expansion in the next one year. These are the key finance hubs where we plan to penetrate and for that we are looking at raising funds. We plan to have thousands of service providers from across the regions we plan to expand into. We are looking at somewhere around 5,000 CAs by the end of this year.
We are in talks with some associations and also are in talks with CIBIL. This association is to avail a feature service. We are partnering with the rating agency which will give rating credentials to my client’s proposals as well.
We are also working towards developing social profiling options where we are fetching fund seekers social data to understand the seeker’s capacity to pay back. We are also trying to develop a chip that will help in analysing various sectors for non-preforming assets (NPA). This will help banks identify if a loan will turn NPA or not.
We are launching our product shortly in UAE. In UAE, the financial segment is regulated and controlled by the authority. So before making it live they have to go through a regulated environment. There are 20-25 players across the globe that have been selected this year and Capita World is one of them. From UAE, we are looking at attracting HNI investors and angel investors who will be our fund providers. In case of fund seekers who are looking at huge investment, we will be charging the fund seekers and not the investors. The charges will be somewhere around 0.4 per cent to 4 per cent. In case of large funds, investors will look at buying equity from the fund seeker. This equity model will be live within the next six months.
Are you looking at raising any funds?
In the first round, we are looking at raising Rs 10 crore. This will help me in our expansion plan. We have utilised Rs 5.5 crore which came from our friends and families as we started operations two years’ back.