Even though there are hundreds of millions of Indians who have bank accounts, only about 30 million of them have credit cards. The plastic card adoption rate has remained largely stagnant in the South Asian nation in recent years.
India’s relatively young credit rating system covers only a tiny fraction of the country’s population. And banks don’t have sophisticated underwriting systems or risk appetites to try to make things happen.
Slice, a Bangalore-based startup, thinks it has found the solution. The startup, which has years of experience issuing its cards to young professionals without traditional jobs, said on Wednesday it was launching a card with 2,000 Indian rupees ($ 27) as the default limit to tap the market. potential of 200 million people.
Rajan Bajaj, founder and CEO of Slice, said the startup’s new credit card – significantly lower than the industry’s lowest of around $ 270 – is for those who don’t have a good credit rating – or no rating – and slowly helps them. built the.
The startup, which recently shelled out up to 100,000 new super cards – its flagship offering – to users each month, doesn’t charge any membership fees or annual fees with its new card and offers the same benefits as its super card.
Bajaj said the startup is able to offer this card to users because it has spent years building their own credit underwriting system that supports it.
“Over the past few years, we have actively invested in building a strong risk infrastructure by leveraging data science. Without strong risk management capabilities, it is impossible to scale such a business and create such a truly inclusive product. But once the capacity is built, no one can deprive you of the growth. Currently, with 50% growth in MoM, our NPA is still below 2%, a validation of our superior credit underwriting capabilities. “
Rajan said the startup arrived at the $ 27 figure because it believes that amount “still allows users to make meaningful transactions,” adding that by using this limit correctly and paying on time, users can instantly be approved for higher limits.
“We’re confident this will encourage users to provide us with the additional information we need to increase their credit limit,” he told TechCrunch in an interview.
The startup, which raised $ 20 million in a fundraising round two months ago, hopes to issue around 1 million of these new cards to users by the end of March next year.
It could increase more, soon. Investors are chasing the startup to fund a new round of funding of around $ 100 million at a significantly higher valuation than its previous round. Rajan declined to comment on the fundraising talks.