Early Salary shifts focus to long term loan products

Fintech startup Early Salary said it is moving its focus from short-term personal loans, which are linked to salaries, to longer tenure products for its customers.

Akshay Mehrotra, CEO at Early Salary, told ET that over the next 10 months, he expects half the book to comprise longer tenure (three-12 months) loan products.

“While 85% loans will be short run, nearly half of the book will be on long-term products,” he said.

The Pune-based firm offers loans up to half a person’s monthly salary with a standard repayment period of 30 days. Mehrotra said even though they are currently adding 10,000-15,000 customers a month, a large part of the demand is still underserved and there is potential to add 20,000 customers monthly. The new products it is launching will help grow that number.

The company recently introduced a couple of longer tenure products for established clients based on their long-term behavioural scorecard. One is a three-month EMI option for a loan of double their salary. The other is Prime Loans, which are for four times the salary amount with a 12-month repayment option.

After raising a Series-B round of Rs 100 crore in January this year, Early Salary has seen a sharp uptake in loans disbursed, from Rs 65 crore in January to a total of Rs 250 crore between January and June. The company has set itself a book target of ₹400 crore by March 2019 and is targeting 100,000 loans a month from the current 30,000.

The new longer tenure products, along with school fee financing and checkout finance through its acquisition of CashCare, a real time lending platform, will help it achieve this target.

“The Early Salary check out product is already live on Amazon and Big Bazaar and doing 2,000 loans a month. We have realised that this is a highly scalable model and will roll this out to other platforms in the next few months,” said Mehrotra.

The company is present in 18 cities and Mehrotra said geographic expansion was not on the cards. “We have covered the big metros and the (respective) IT corridors (in these cities) where most of the salaried class is. We are working with 200 corporates on our B2B model,” he said.

Besides directly onboarding consumers, Early Salary has tie-ups with companies to offer loans to their employees. It also recently tied up with Bankbazaar to offer short-term personal loans through their website.

At present, about 15% of Early Salary’s revenue comes through aggregators like Paisabazaar, but Mehrotra said this could go as high as 30% over the next few years.