In recent quarters, dozens of startups in India have grown to improve the banking experience for millions of users and businesses in the country. As a result, tens of thousands of people who couldn't get a credit or credit card from a bank can now both secure from fintech startups.
However, this urge to enable everyone to have financial inclusion has many areas to cover. For example, workers are still faced with the challenge of using some basic banking services.
Kosh, a startup supported by Y Combinator (W20), is starting to take on this challenge. It groups three or up to ten workers and grants them a loan.
"When a user logs in to our Android App you can apply for a loan. But before they do that, they need to add some of their colleagues and friends who are also looking for a loan, ”said Aayush Goel, co-founder of Kosh, in an interview with theinformationsuperhighway.
This way of bringing people together allows Kosh to charge a lower interest rate on the loan, Goel said.
"We borrowed this from the world of microfinance. We essentially have a joint liability model. Let's say three people were looking for a loan. We are joining them together and instead of giving each of them their own credit, we are giving the group a loan, ”he said.
In each group, at least one member is creditworthy in the traditional sense, he explained. The startup also uses alternative data, such as information from text messages, to determine a person's eligibility.
With such an agreement, fewer people have traditionally been late (or late) due to the social pressure of their colleagues and friends, since all of them are liable.
Kosh started paying out loans in December. Loans are currently being offered that double the salary of an individual and over a term of up to 10 months, said Goel. The startup paid out almost 150 loans worth $ 35,000. It works with a non-bank finance company based in Noida to fund these loans.
The startup plans to expand its neobanking offering this year by setting up bank accounts for its customers. “There is a general lack of discipline in how these people spend their money. Having access to a bank account that works for them could prove very useful, ”said Goel.
In recent years, a handful of startups such as Open and NiYO Solutions from Bangalore have developed neobanks or alternative banks to serve companies and individuals. In January, two former Google Pay executives announced their own neobank startup to serve millennials.
GIGI Benefits, another startup supported by Y Combinator (W20), offers insurance and savings to gig economy employees and freelancers – benefits that normally only full-time employees have.
"We help every worker put aside a portion of a paycheck to cover their insurance costs, short-term expenses and retirement plan," said Sowmya Rao, founder and CEO of GIGI Benefits, in a post.