Although hundreds of millions of Indians have bank accounts, only about 30 million of them have credit cards. The acceptance rate of the plastic card has largely stagnated in the South Asian nation in recent years.
The relatively young credit rating system in India only covers a tiny fraction of the country’s population. And banks do not have sophisticated underwriting systems or the risk appetite to make any attempt to move the needle.
Slice, a Bangalore-based startup, believes it has found the solution. The startup, which has years of experience issuing its cards to young professionals with no traditional jobs, announced on Wednesday that it is launching a card with Indian rupees 2,000 ($ 27) as the default limit to avoid the potential addressable Market in the country of 200 million people.
Rajan Bajaj, Founder and CEO of Slice, said the startup’s new credit limit card – significantly lower than the industry’s lowest of around $ 270 – is aimed at those who don’t have great credit – or scores – and are slow at doing it Build it up.
The startup, which has recently been paying out up to 100,000 new super cards every month – its marquee offer – to users, does not charge an entry fee or annual fee 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 its own credit insurance system to support it.
“In recent years we have actively invested in building a strong risk infrastructure through the use of data science. Without solid risk management capabilities, it’s impossible to scale such a company and develop such a truly inclusive product. But once the ability is built, no one can steal your growth. Currently, our NPA is still below 2% with a growth of 50% compared to the previous month, which is a confirmation of our excellent credit insurance competencies. “
Rajan said the startup hit the $ 27 number because it believes that amount “still allows users to make meaningful transactions,” adding that by properly using that limit and the on-time payment can be approved immediately for higher limits.
“We are confident that this will encourage users to provide us with additional information that we need to increase their credit limit,” he told TechCrunch in an interview.
The startup, which raised $ 20 million in a funding round two months ago, is hoping to issue around 1 million of these new cards to users by the end of March next year.
It could rise more soon. Investors are chasing the startup to fund a new round of around $ 100 million at a significantly higher valuation than the previous round. Rajan declined to comment on the donation talks.