Access to Formal Credit Still Not Available to Students in India: CEO, mPokket

As a student or young professional, almost everyone has sought peer-to-peer financial help, particularly in India wherein formal credit to students does not exist till date. Mr. Gaurav Jalan saw this as an opportunity with great growth potential and went ahead to establish mPokket to address this credit gap for students and working professionals.

Gaurav Jalan

Mr. Jalan talks to MediaCatalyst about mPokket’s journey and business model.

Here are the excerpts from the interaction with Mr. Jalan, CEO and founder, mPokket.

What’s the inspiration behind mPokket? Tell us a bit about mPokket’s journey.

mPokket was created to help those excluded from the traditional financial system to obtain credit. The inspiration came from my life experience. Even as a foreigner and a fresh college student in the USA in 1997, I was able to obtain a credit card, which allowed me to manage finances much better and overcome temporary cash shortfalls easily. However, whenever I spoke to my friends in college in India, it was obvious that access to any sort of formal credit was not available to them and that they only had the option of borrowing from friends and family when they needed money – and this situation prevails till today.

So, I established mPokket in 2016 to address this credit gap. We started operations as a peer-to-peer lending platform and raised our seed round of funding in 2017.  

In 2018, we tied up with an NBFC for lending and worked on improving our credit algorithms and technology to enable scalability. As a result, 2018 was a landmark year for us when we raised funding in the Pre-Series A round and also achieved company-level profitability, in addition to pivoting the business model. 

In 2019, mPokket crossed 1 million KYC approved users. In 2020, we have raised funding in the Series A round and also launched small-ticket loans for salaried individuals early this year, besides our existing offering for college students. We have also reached the Rs1500 crore annualized disbursement run rate this year.

In the four years since inception, mPokket has expanded from a 3-employee venture to employing more than 700 people serving students and salaried individuals in more than 19000 pin codes across the country.

Students have the weirdest of the reasons to seek money. Share some reasons cited that you may have found laughable or weird?

Most students borrow to meet their requirement to purchase something or to pay some education or travel-related expenses. However, we do sometimes hear of odd reasons for borrowing. For example, somebody recently told us they borrowed money to get a tattoo done. Treating friends and girlfriends is something students often need money for. One user borrowed for expenses towards his sister’s marriage.

The Coronavirus pandemic has impacted every business and everyone’s life. How has it impacted mPokket’s business?

Unlike many lenders who decided to stop lending during this challenging period, at mPokket, we continued lending even during the peak of the lockdown. We realized that it was particularly during this period that many people needed the money as their sources of cash flow had been interrupted due to either salary cuts or layoffs across industries. While we did tighten our risk parameters to ensure that the business remained viable, our actions helped us build customer trust and have helped us bounce back very strongly since the lockdown has ended.

Are there viability concerns for mPokket or regulatory issues that may be an obstacle in recovering bad loans?

We run a profitable business with a robust business model that helps fulfill an unmet customer need. As the industry is young and there are many more customers to serve, the growth potential is also very high. So there are no concerns about viability. Lending is a regulated industry not just in India but globally. As a responsible industry participant, we adhere to all rules that apply to us.

Now that the lockdown is in process of being lifted and everything is opening, what are your plans and strategy for mPokket’s expansion and funding?

We expect to disburse about Rs.1200 crore in FY2020-21 and expect to grow, which implies 70% YoY growth despite the COVID-19 pandemic. mPokket currently has a user base of more than 1 million KYC-approved borrowers, which we expect will reach 1.5 million by the end of FY2020-21. We are seeing substantial growth in the new segment we have ventured into – lending to young working professionals. As a business, we will continue to add new customer segments and also, additional products and features for our existing customers. Our goal is to become the preferred provider of credit led financial services to the vast majority of youth in India who are not properly served by traditional financial institutions.

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