New Delhi: For Gaurang Sanghvi , 30, who had just moved back to India from Belgium, the refusal of a small personal loan by a local bank was the spark that resulted in an entrepreneurial venture: InstaKash .

Companies such as InstaKash reflect a growing trend in India-an increase in the number of start-ups in the alternative lending category, aimed at individuals and small enterprises.

Start-up research firm Tracxn estimates that around 30 such companies have sprung up over the past 18 months and that around $27 million of investments have been made in them in this period.

The private bank declined Sanghvi a loan simply because he had no credit score (he didn’t have a credit card and had never taken a loan in his life). Most traditional credit-rating agencies, including the Credit Information Bureau (India) Ltd (Cibil), give such people a zero score.

The list includes firms such as Lendingkart, NeoGrowth Credit Pvt

There is a huge gap. Barely 200 million people in a country of over 1.2 billion citizens have a valid Cibil score and thus scope to get a loan from any bank in the country,» said Sanghvi.

His start-up, which is licensed as a non-banking financial company (NBFC), offers loans and also creates credit scores of its own by tracking a user’s online activities, such as payment of utility bills, e-commerce purchases, and even social-media behaviour.

It charges 2% interest a month on loans it disburses

Most of the online alternative financing companies are either marketplaces for NBFCs or are NBFCs themselves. Читать далее →