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A Deep Dive into the Business of Education Finance in India | Prashant A. Bhonsle (Kuhoo)
261 Plays2 years ago
"It's easy to give money away; the most difficult thing is getting it back."
This is the fundamental, hard-learned lesson from a 30-year veteran of the lending industry. Prashant A. Bhonsle explains that the real art of building a sustainable financial institution lies not in aggressive loan disbursement but in mastering the underrated science of collections.
Prashant A. Bhonsle is a 30-year veteran of India's financial services industry and the Founder of Kuhoo Edufintech. A true pioneer, he was part of the founding team at HDFC Credila, India's first dedicated education loan company, which he helped grow to a ₹10,000 crore loan book while maintaining a remarkable sub-0.1% NPA rate. In this conversation with host Akshay Datt, Prashant shares how he raised one of India's largest seed rounds—$20 million—to build Kuhoo, a tech-first lender on a mission to make students financially self-reliant.
Key Insights from the Conversation:
- The Three Pillars of Lending: Prashant argues that any successful lending business must be built on a mastery of three core, non-negotiable pillars: Risk, Collections, and Compliance.
- Underwriting Potential, Not Parents: Kuhoo’s core innovation is its ability to use data science to predict a student's future earning potential, allowing it to offer collateral-free loans to meritorious students who would otherwise be ignored by traditional banks.
- From "Analog" to "Digital": Having built India's first education loan company with a traditional, "analog" model, Prashant is now using technology to solve the same problem with greater efficiency, scalability, and customer-centricity.
- Crisis as the Ultimate Teacher: Launching HDFC Credila at the exact moment the 2008 global financial crisis hit provided invaluable lessons in resilience, risk management, and the importance of having fundamentally sound business principles.
Chapters:
(00:00) Introduction
(01:38) From Pepsi's "Cola Wars" to the Dawn of Telecom in India
(04:41) The ICICI Bank Playbook: How Third-Party Distribution Disrupted Banking
(10:46) Pioneering Student Loans: The "Zero to One" of HDFC Credila
(19:21) Launching a Business into the 2008 Global Financial Crisis
(24:41) The Secret to a 0.1% NPA: How to Underwrite Risk in Student Lending
(39:00) The Kuhoo Thesis: Why India Needs a Tech-First Education Lender
(40:19) A Masterclass on Lending: The 3 Pillars of Risk, Collections & Compliance
(54:00) Building the Machine: Kuhoo's Fully Automated, App-Based Student Journey
(1:13:15) The Future of Edu-Fintech: Building a Billion-Dollar Book & Beyond
Hashtags:
#FounderThesis #Fintech #Lending #Startup #Entrepreneurship #PrashantBhonsle #Kuhoo #VentureCapital #NBFC #StudentLoans #EducationFinance #RiskManagement #IndianStartups #AkshayDatt #MakeInIndia
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Transcript
Introduction and Background
00:00:00
Speaker
Hi guys, I'm Prashant. It was very live in the summer. It's cool. Technology is cool at once.
00:00:18
Speaker
India believes that every citizen has a fundamental right to education. But actually making this happen requires more than just building education infrastructure. The country also needs to enable access to finance to pay for world-class education.
Introducing KooHoo and Industry Insights
00:00:34
Speaker
KooHoo is a fintech startup that is solving this problem at scale by using technology. They are in the business of lending to students for their education. And while there are plenty of companies giving loans to students who are joining tier 1 colleges in India and abroad, KooHoo is catering to the long tail of students beyond just tier 1 colleges.
00:00:54
Speaker
In this episode of the Founder Thesis Podcast, your host Akshay Dutt talks to the founder of KooHoo, Prashant Bhosle. Prashant is a veteran of the lending industry, having a track record of building up HDFC's student lending business with some enviable numbers. This conversation covers the evolution of lending in India through Prashant's own multi-decade experience and offers fascinating insights about using first principles to disrupt the traditional way of doing businesses.
00:01:21
Speaker
Stay tuned and subscribe to the Foundathesis Podcast and any audio streaming platform to learn about using first principles to disrupt businesses.
ICICI Bank's Retail Finance Expansion
00:01:38
Speaker
ICO is a bank who started operating. They started going very aggressively in retail finance in India. They were changing that. Those were the early days of ICO in bank 2001-2002. And Mr. Karmath had his vision of changing the Nancy App. He eventually did join the banking and financial services. And since then, I've been cured by the financial services. But ICO is the first
00:02:03
Speaker
I joined ICICI home fund business as the head of business for Gujarat state. And then I very quickly, I think our team performed very well. We grew by I think five, seven X of what they were doing in one yard. And then I was brought to Bombay and then given much bigger.
00:02:22
Speaker
How do you grow home finance portfolio? Like one would be like tying up with real estate developers that when they sell, then you won't get a button. And then through the branch network like customers.
00:02:39
Speaker
early adopters of third-party distribution and financial services till the light year, it was a branch-driven model in banking expansion services in India. Either you walk into a branch or pretty much the branch actually till then.
00:02:55
Speaker
And then ISA brought in this concept of third-party distribution, which is DSAs and excelling agents and dealers and all that. I think that became their strength and that's how they could quickly grow very faster and much, much faster than both the market and the competition. And that's how we took an order of affection from other players like HDM, established players like HDM, CSP and all that, right?
00:03:20
Speaker
and kind of a much abused world, but kind of disrupted that market largely. So you're absolutely right. The sourcing challenge world developers in particular areas, catchments, what they used to do was brilliantly done by us. Actually, they would actually evaluate developers completely, very thoroughly.
00:03:45
Speaker
And they will then start approving the project approval started. They would approve the project, do the technical of the project. And then, let's say, this is kosher and any customer who buys here will not fix the property. And that is how we are open to lend to those customers who are buying property here. And that's it. They would come much faster.
00:04:09
Speaker
much faster because now every node you're not doing the same legal, technical, valuation, so on and so forth. That happened and the processes were very good. I should say with the early adopters of technology also, so not of six sigma. So first time I heard and implemented and learned about, I was trained for six sigma and all that and be implemented very, very closely. So spent about six years, three years and then I was given one of the green projects that Mr. Tamath had at that time of
00:04:39
Speaker
cross-selling to the same customer. So over the years, they realized that ICLC was growing at a scorching base, acquiring a lot of customers in different products. And then realized that if you have acquired, let's say, a customer for home loads and you've sold an ICLC bank home load to that customer, and that customer now comes after a year, two years, three years, comes for buying a car and an auto load.
00:05:06
Speaker
Then you would go through and their strength was third-party distribution. Then you would go and give the same pair through your nose to the dealer to acquire the same customer again, all over again. While the customer sits in your records and database and then we realized that is a cross-sale option.
00:05:23
Speaker
These third-party distributors are essentially like a boiler room operation, where there are people sitting and calling and calling. Yeah, so different type of third-party distributors, one, of course, like in non-finance, they were developers, so the people over the suppliers became the point of sales. They owned the property they were selling, and they were enabling the financial because it improves their business.
00:05:50
Speaker
Because if there is a loan available for the property, there are higher chances that the property will get sold faster. Similarly, there were third-party distributors who were not suppliers, who were not developers, but they had the confidence to run a sales operation.
00:06:05
Speaker
So they would, what they would do, and they had a catchment and they were running some other business. So they had a customer database and all that. So they would reach out to that customer and say, I have a partnership with
Prashant's Entrepreneurial Journey and Challenges
00:06:16
Speaker
this builder and I can get you the loan. So they become the conduit. So between the supplier and the financial, and those are called the direct sending agents. And similar thing in auto loans also. So there are dealers who sell cars and then they become the enablers of dentures.
00:06:35
Speaker
But also there are dss who will go to these dealers and say I can get you this logs and then go and acquire a customer and then go and get this. So these are different types of dealers. So when I was part of the team that built the first, so to say, crossing bottles in India for
00:06:55
Speaker
for existing customers of any bank. So we started the first half an hour loan, which has become not 10 second lower, it's exactly same model, right? During early 2005-2006, I was part of the support team, which is the credit scoring in the India very nascent stage. So we were doing the evaluation of the existing track record of customer devices, whether they are liability customers, saving bank account or loan loan customers.
00:07:22
Speaker
how they've been behaving and they score them and then say, oh, they are a good customer and we should offer them one much lower process intensity and all. So those, that's where they started now giving pre-approved offer to if you were an ICICI consultant. So I spent a lot of time there, it became a big model, a large team, few thousand people and all that. And then I got the first opportunity to taste
00:07:50
Speaker
a little bit of entrepreneurship because the approach to after about six, almost six years in ISSA bank from in 2000, early to 2007 as approach for two brothers who had gone to US for the hard studies in late 80s, early 90s and spend about 10-15 years there, they got out, they started doing well. One was
00:08:15
Speaker
and they had started that one of them had come back in 97, 98 to start one of the first BPOs in India and the other one said that so they were running a BPO operation which they sold to somebody else. What was it called? That BPO was called claims data processing or something and it was sold to WNS, right? And these two brothers actually got to know about me and come out through some connect they wanted to come back
00:08:42
Speaker
started financial services in India. So they approached them because they had more US experience in India experience and not financial services. And so they wanted somebody in from the domain. And the three of us, they said US, this stolen-blown business, at that time in 2007, it was the third largest asset class there with $1.5 trillion dollars outside.
00:09:06
Speaker
After mortgages and credit cards, this was the third largest census class. 1.5 trillion downloads of outstanding student loans, right? While India had four times more the population of students and total population also. They said there is an opportunity here and why don't we start this and then I started
00:09:25
Speaker
understanding why is it that education laws don't happen in India at that time as against 1.5 trillion dollars are outstanding India had only 3 billion dollars outstanding was true so it was more than I have
00:09:38
Speaker
multi-fold higher, much bigger market and all that. And then I got into the weeds and I tried to understand why is that when I was an ICSI bank, we were aggressively sending home loans to winners, credit card, personal loans, and you name it. And under this sign, a whole asset class. We were so aggressive that we were changing policies and launching new products, new technology, processes, everything. And nobody had never occurred to me that as well.
00:10:04
Speaker
There is a need for a student loan and so I got very intrigued. I started researching and then found out that why there is large demand, nascent demand in India for a stolen loan because the cost of education has been going back forever and loans are not easy to come by. Then I started asking questions, why is that? Why everything else is very interesting for banks?
00:10:33
Speaker
Because after ICICHTFC became very expensive, SBI got into the game and they launched those 7% on non-product purpose.
00:10:44
Speaker
No one was doing anything on social lending. While we are democratically one of the youngest countries in the world, we have large population of students, large school, aspiring students, middle-class families, and they request family who understand that education is for their next generation, the only way forward.
Navigating the Student Loan Market
00:11:06
Speaker
So, culturally, we were implying to give education to our best education tour and best education started costing now much higher. So, this puzzle was very big puzzle, very intriguing, right? Then I got to when I then realized when to, along with those two and then we established one MBFC and
00:11:24
Speaker
and the NBSC was called and then I started working hard to understand the gaps, the pain points the students were facing, parents were facing, the students were facing. Banks were saying this is a portfolio which in banks is the most bleeding portfolio which by the way is the scenario as of today won't show. What do you mean it's not a bleeding portfolio?
00:11:48
Speaker
meaning it is a very high NPA portfolio. At that time, $3 billion of outstanding was there, as I told you. Today, there are about, I think, $12 or $13 billion of outstanding in the last 14 years has grown exponentially. However, the NPA has remained, actually. So, out of this $12-13 billion of outstanding, $1 billion are in NPA action, 6-7%.
00:12:16
Speaker
So it continues to be a high-end PA business for banks and then logically makes sense that any business where you're losing money and not making profits, you would be ready to do. And then I try to understand why is it that, why student loans are high-end PA, why that's why students get job, it's a growing economy, 7, 8, 10% GDP.
00:12:39
Speaker
everybody seems to be getting jobs. So why is that? So then I realized what are the big points, the issues with the quality of education, the issues with the bankers not understanding new courses, colleges, their forward employability and so on and so forth. And how would you underwrite if somebody comes to us, known for a course in university or then after them would not have even heard about them or somebody comes and asked for a course in India where the university is a deemed university.
00:13:09
Speaker
So on and so forth, right? So those are the challenges, operational challenges for sure. So this became, then I realized this is a very unique product or an asset class, which is unique, not only in India, but even if you see developed market, that's the only asset class where banks are not the primary large display. They become largest player eventually after buying portfolio. So there's specialized players in the first model and empower and all and so on and so forth.
00:13:39
Speaker
So then we started solving those problems one by one and started this come nbf3 as the first specialized student loan company. And there are quick questions here, starting in nbfc is a lengthy process, right? Like to get RBI approval, it all takes time. It's a robust process. It takes anything between five, six months to about eight, nine months to get a license. And the process was pretty
00:14:06
Speaker
Needing process and on that regard in the process required also because you're into financial services and it has implications not only on on the customers and it has implications of the ecosystem. So I would not say you were like one of the co-founders of credula.
00:14:22
Speaker
No, I was the professional. Professional brought it to run it. Brought it to run it. I was the country head. Because both of the brothers did not have the experience either of India or the flagship web system, especially lending. And they were also trying to do it for the first time. But at least I knew lending. I knew collections. I knew underwriting. I didn't know.
00:14:45
Speaker
new processes and regulations to a large extent. So that's what happened when we started that discussion. And luck would happen because you told me at the start that the founders are there and they would want to know the journey. Very interestingly,
00:15:05
Speaker
As luck would have it, we were very passionate. I was passionate about education all the time because you can impact lives of people and you are enabling somebody with higher education. So we started building the nuts and bolts, building the product. I spent a lot of time on campuses, septum messes and hostels and trying to understand and then started building the product and started hiring people and so on and so forth.
00:15:29
Speaker
went to RBI and then we got some data and did the first case work. We started in 2007 doing all of these things and for about a year or so we were doing, we've been to about 40 to 50 people team and we had a, we build the systems grounds up because then nothing like this available but nobody was doing it. It was very nice and only banks were doing it for, for social reasons.
00:15:53
Speaker
As luck would have it, so I still remember, I think we gave the first loan of some 80,000 rupees to a student in 23rd of March 2008 or something. And just to see whether the water flowing in the pipe or not, the system we have built, the process we were working, the disbursements happening, all of those things, right? And we were very excited, dumping chairs, so it went through and we went out.
00:16:20
Speaker
And that week, 23rd of March, till 31st of March, in that week we must have given some 4-5 loan. And on 31st of March, weird stunts went belly up in the room. And that was the start of the financial crisis of 2008. And in between, while we were doing a lot of these things, we were very lucky. We got DSP Merrill Lynch as our minority stake equity partner.
00:16:47
Speaker
So, they were in the pipeline. One of the things they had agreed with us was not only equity, but they had agreed that we will also participate in giving you a debt whenever it is required. And that was very critical because we are entering into a domain which is supposed to be the high-risk domain.
00:17:08
Speaker
So unless you prove yourself in the next few years, then it will be very difficult for you to generate debt. In a nending company, you can't raise debt. You are more or less debt, actually. So we wanted that. So we had done that and we're very happy that now we are very passionate about debt diligently, one business model, all that debt. We are pretty confident that we've succeeded.
00:17:30
Speaker
And this happened. And after that 31st March, I think a few days later, Lemon Aquarium and a few days later, Merrill Lynch happened. Merrill Lynch was the parent of DSP.
00:17:46
Speaker
So they became Bank of America. It was like a distress sale to Bank of America. They didn't want to be part of any retained cash. At that point of time, people were preserving whatever they had and not planning themselves. So that happened.
00:18:06
Speaker
And we were in the first six months, then we had to go back on the street and find the other equity partner in the worst time ever. So it's a classic founder, first time founder kind, first step problem question. And even before you started, you kind of still go on, right? So with everything, this is the headwind that you never could, anybody could have imagined, right? And we searched.
00:18:33
Speaker
So your business was more than it's done, even before it had started. You only had equity for still there. You had not raised it. No, nothing zero. And that was gone. So we didn't know what to do. And so there were two options.
00:18:49
Speaker
I had an opportunity to go back to corporate war, close the shop, which was anyways getting close to the ranch.
Partnerships and Expansion Strategies
00:18:55
Speaker
Now that you have the title, and both the brothers are adding back to the DP of this network that sold to it, starting another venture. That meant they had done a good job about it.
00:19:08
Speaker
All three of us then decided that we'll dig our heels and see through this phase and see if we can get out from the other side. And mind you, we're one of the toughest times of my life, actually. Worst time, man.
00:19:23
Speaker
And then you realize that you must have also hired people, built up a team. Yeah, about 45 people. Every month there was a payroll coming. So classic roller coaster as they call it in startup world, right? And none of your fault, you've done whatever right you could do with a lot of scare and diligence. But this is what happens when classic. But also when we saw
00:19:51
Speaker
Met a lot of private people and all that. One of the meetings were with the state city and Mr. Park. He is very passionate about it.
00:20:00
Speaker
education. And even during that time, he was such a he's such a visionary person. That's why he is what he is, right. And that's why HDFC is what HDFC is, is because he could see the potential of the business, he could see the the disability that he had built on and he was obviously passionate about education. So he said, I will say that he agreed to participate and took that minority straight from it and started
00:20:27
Speaker
We looked back and we started growing very fast and I was there for about five, six, four years after that his country had to grow the business, made it profitable. Was it as an STFC subsidiary then? Yeah, it is now. So they acquired this one stake and they let us speak. We started building the business again as we had planned. And they gave you debt so that you could grow your loan book.
00:20:55
Speaker
Well, then so what happened was that after you got that name, then as you started trying growth and the seasoning and portfolio was also performing. In fact, in fact, one of the notable things which I'm very proud of is that in those seven, eight years of my, my being with that company right from the scratch and we'll take it from zero, the portfolio for 14 years, they never crossed 0.1% in NP, 0.1%. In an, in an industry,
00:21:25
Speaker
In an industry which is brought with NPA 6 to 7%, in that industry for 14 years that company never crossed 0.1% of it. Here they have a 10,000 crore book now, NPA is just slightly of both but I think it is still not crossed I think.
00:21:42
Speaker
What's the secret behind that? All the hard work that when research was done, we listed painstakingly every course, every university, banking, potential employability, sector-wise employability. If the student comes from, we could pretty much actually predict the trajectory of any student with different combinations. Something has done like mechanical engineering and pretty
00:22:12
Speaker
They did any college and now three, four, five options. They could go to MS in the US. They could do an MBA in India. They could join their own family. They can actually do M-TEC. They can start their own business. We could.
00:22:28
Speaker
Now, in Kohu, actually, we have developed on that market boundary, but we started there. We could predict what is going to happen because we knew exactly which course, which university, which college, which potential employee, if they're doing for STEM, if they're doing computer science, if they're doing data science. So that worked actually a lot of research as well. And you're doing both domestic education and study abroad.
00:22:55
Speaker
Yeah, at that time, study abroad is where we started because that was larger, the demand was higher and all that. Over the years, because of that reason, they continue to still focus on abroad education. Why am I focusing more on here now? Because I think that problem for abroad has been solved more or less. There is a couple of players now.
00:23:18
Speaker
And banks also become more lenient after seeing credit-long success and all that. There's an empirical data available of 40-50 years of almost no default of if you do the underwriting risk management operations, then you don't, people don't recall, they have to realize that. So there is a, there is now availability of loans there. But India is much larger market according to engineering, MBA, coaching classes, executive education, tech, vocational.
00:23:47
Speaker
There's so many where exactly the same problem, which I was trying to solve for abroad in 2007, 8, 5, 10, 11. Now we are trying to do that. At Cradilla, basically you first had a curated set of colleges and for each college you had data like average salaries. And for the US market, this data would be readily available. By the market also.
00:24:09
Speaker
us australia like most of these developed economies would have this data and based on that there would be a decision on whether to lend or not and you would not lend if the college was not so credible all the expected jumping salary was not substantial
00:24:32
Speaker
What about what part of preventing NPIs at the time of giving the loan, where you do the risk of the writing? What about at the time when the money becomes payable, like whilst the student graduates?
00:24:43
Speaker
Yeah. So look, though, one of the things we learned, and this is a trade segment I'm giving on your podcast for the first time is, look, one of the things this management student loan is also managing the transition of students from campus to corporate.
00:25:00
Speaker
So even if there is an intent and ability, both are students. So intent is good, the student wants to repay and also because they've now earned a good degree qualification, graduated, they'll be able to pay because they're getting a good job. However,
00:25:18
Speaker
The transition is where the vulnerabilities. They're the most vulnerable because invariably you expected that if you're joining a course in India or abroad and you think you will get a $100,000 job, but you've got $50,000 job or $60,000.
00:25:35
Speaker
So your planning goes, here it's more pronounced because it is not dollar to rupee conversion, here it is. You wanted a 10 lakh rupees job from campus and you got a 6 lakh rupees job campus and suddenly everything is changed.
00:25:56
Speaker
Even if you have done that underwriting right and you have packed the course, employability of future century and all that, this transition because India's financial literacy in young people generally is slightly lower than relatively others.
00:26:13
Speaker
But especially young people, because we all get in very fast families, we get raised in a protected environment. You're not exposed to finances of the family or budgeting or all of those things. Personal finance, that's why there's no such thing as earning your pocket money. So all characters, even the best students do not have the appreciation of financial discipline or literacy. They do not know enough.
00:26:39
Speaker
And there is a discipline issue. They don't appreciate that, if I don't repay my loan, it will be very difficult for me, especially abroad, where buying a loaf of bread also, you should do it on a credit card. And you will not get a credit card and other products and all that. So, bureau scores and all those things. So, sensitivity to that is missing. So, you manage that a lot of customer evangelization and education was required in doing that, right?
00:27:08
Speaker
And that's right. So one of the reasons, other than the product processes, technology and all of those things are bigger in operation, we were also doing a lot of customer education and that actually contributed to low end players and all of those things. So that transition, if you manage well,
00:27:25
Speaker
that because they will leave job, if they get a job from campus, they will leave one city, join some other city. From there, they will leave that job and join some other company and go to some. So, managing this transition and mobility for tenure, which is normally the ten other loan, is really difficult for an inbound branch model for anywhere. Unless you are tech-enabled, your processes are very flexible and you are nimble-footed, it becomes very difficult.
00:27:53
Speaker
Like you would have an account manager who would call a student and like went to graduate. So servicing system, once they graduate, that's the servicing system and may not be only economy started exactly like the way you are saying, but then we graduated to make it more people independent.
00:28:14
Speaker
Okay. So we did not have to... Email SMS. Email SMS, auto driven and you put call out number and check. And now here... And you give them the flexibility that in case they want to reduce the payment to the monthly installment they can...
00:28:28
Speaker
At that time, we were doing it more selectively. Now, we've taken all that and all of these options are now on the click of the button. This is what it built, right? So you could self-manage your, some bonus or something. All of these things, they'll be able to do it on a app or a web. Interesting. So why did you leave Cradler? Like you were in a way like heading the business, growing it from zero to one. Yeah.
00:28:56
Speaker
No, it was a startup. It had become with HDFC and HDFC. Yeah, I was enjoying myself. We were growing. We became profitable very fast and we had the best cost-income ratio as this HDFC is hard work actually. What does that mean?
00:29:13
Speaker
So in lending, one of the best metrics, matrices or metrics that every investor analyst or banker, what they saw looks at its cost-income ratio. So your income is your name, fees and all of those things that, why does NPA was, net interest margin and all that. So what is the, you are charging, let's say 15% rate of interest, what is your cost of operation, NPA and all of those things.
00:29:39
Speaker
What is the spread and then net interest margin? So that's your income, right? And then what is the cost? So at what cost is HDFC spends 100 rupees for doing X amount of business? What is the profit they generate? And if say 100 rupees being spent by some other people for the same amount of business, what is the cost? And that HDFC is the best in the business then.
00:30:05
Speaker
So we were running a very tight operation, very quick. So all of those things and it became a very successful course. So in this cost income, the cost of say the payroll, the technology, all the costs of the company.
Transition to Incred and New Ventures
00:30:25
Speaker
So margin will be high if you are able to get funds at a lower cost, which like a bank like CFC. Yeah, cost of fund is what? But cost of operation becomes that key because cost of fund for similar players will be more on a similar for SBI, SBI with the lawyers and HDFC.
00:30:45
Speaker
There'll be some difference, but there is a cost of fund arbitrage, but the cost of operation is where the game is. If same number of people can do more business and same number of branches can do more business and more high quality business and keeping the NPSO, then obviously you are more profitable than anybody else. That's what HDFC once has been able to do for so many helps, and that's why they trade much, much higher than anybody else.
00:31:12
Speaker
So I was doing all of those things. I was enjoying myself, which had become a very large operation. And then I realized that over the seven, eight years, it became more or less a large corporate role again in a large bank, right? And I'd got my blood based on the blood of one of the brothers. So I was reaching to do something. So then I...
00:31:36
Speaker
joined the startup bridge at Bangalore. They wanted to see, they get just started happening coming out of the shackles in India and Bangalore obviously has been the startup capital. They have joined a very interesting, innovative platform company called Vukak and as a president, the founder is very exciting.
00:31:58
Speaker
guy and then grew that business B2B business. Help me understand what was the product that they were building. The product was a big platform which is given to all the large media corporates and businesses to run their project management software. So it was a very interesting
00:32:17
Speaker
So it is a combination of project management, workflow management, processes, knowledge management, actually. It is something very similar to Slack if you use Slack. Slack is Slack now. So very interesting. Slack stands for kind of a second. Same. So it was built on a very exciting product. And then he made in India for the one kind of work.
00:32:49
Speaker
And then I got the first 10 experience of how the tech world operates, right? We need to be tech as few hundred people to 50 high profile techies.
00:33:03
Speaker
handling them and working with them, building the product and fantastic experience. Intellectually very intense and also different selling experience, different deal, all that. So we launched in London, we launched in Dubai, we launched in the US, we launched in India. We had already built a profitable business and I was there for about two and a half years or so. I have about 150 large medium corporates and so that was a good model and then
00:33:32
Speaker
Well, I got in touch with the director of the book. He was the founder of Incred, actually. He was part of Anshu Jain's debuting, Incred. He was an investment banker called Bropinder Singh. He was in Singapore, in Deutsche Bank, and London in Singapore, 1630 years ago, in Deutsche Bank.
00:33:56
Speaker
He came to India, he wanted to start financial services on his own. And so I got in touch with him and said, this is what I'm planning and why don't you let's do it together as a co-founder and all that. I said, what are you planning? Then I was enjoying my tech journey and I said, no I'm not.
00:34:14
Speaker
And then we quoted for about nine, 10 months. And then finally, it would convince a certain comeback to whoa, which is connecting services. This is where action is. And you seem to have the right combination of large corporate lines and services and tech. And so this is what we want to bring in the fintech, right? So why don't we do it together?
00:34:34
Speaker
So I joined as the retail finance person on the table and started with him, started building. That company has spent about five years. So this was like a lending focus, like they had an inlet again. They are in NBS, they are now.
00:34:54
Speaker
They merged with KKR, so it's an incredible answer. It's a large one now. I think more than 5000 crores of balance rate. I spent five years from zero again. This was my third startup gig from Redlaw to this tech thing and then Incorrect. So I spent five years right from zero.
00:35:14
Speaker
And what products were you building there? Well, home loans. There's a separate company as the MD and CO for home loans we built that built very quickly. I went to a team of two other people and I think $300 was a portfolio in about two years of old housing and sold it twice the IDFC bank and then Amazon's responsible
00:35:34
Speaker
And each of these was a separate NBFC, like the Home Loan because Home Loan license happened separately, so that was separate. But all of the businesses happened under one NBFC license, which is, your store learning was one of the verticals that personal loans and two-wheeler loans.
00:35:53
Speaker
So we did that for a long time and for about five years and then Google happened and with Westbridge Capital we decided that it's high time that you build the tech version and analytical analytics driven version of what we built in
00:36:11
Speaker
that was why design very analog model because nobody would give us during that time the 2007 to 14 month of best time for tech and so on and also I was entering we had entered into a domain which was seen as very risky so nobody would have actually given us any chance of it said that we are building a tech company in a six-part
00:36:41
Speaker
We had to show that we are doing everything diligently. So we built an add-all of that bottle by design. And that became successful. So for good or for bad, the new players who say would followed should followed exactly the same model. They got fairly successful. So there was a need for a business which is now driven by the intelligence and domain expertise, which had built over 14, 15 years.
00:37:06
Speaker
Use that and translate it into what needs that is world-class in terms of product innovation, in terms of technology, data science, all of those things. You've set up lending businesses. Tell me that zero to one journey of setting up a lending business and you can view that in with how you did that for Google also.
00:37:26
Speaker
According to me, blending business is one of the easiest and one of the most difficult businesses to do. Easiest from the business point of view because there's always going to be a demand for you to find customers.
00:37:45
Speaker
Yeah, it is easy to give money, right? One of the most difficult business chains because once you've given money, it's the most difficult thing to get it back on time and the way you want to get it, with interest. This is zero to win journey. One of the few things that I learned was this thing in lending business right from the beginning and we were taught by the right people, I got lucky, right mentors.
00:38:12
Speaker
and good systems. I sense of anger's amazing system of technology and leverage it. But most importantly, look, lending business, what I've learned or understood is, lending business is the business of taking risks. Every loan you give, you take risks.
00:38:34
Speaker
And I've seen a lot of businesses, good founders, good product, good companies, good funding, but struggle in lending because
00:38:45
Speaker
If you take good risk, you make money. It's as simple as that. If you take bad risk, you lose money. So, blending business, if you can manage risk to it, you understand risk, you have framework of managing risk, when you have resilience and tenacity to adhere to that
Risk Management in Lending
00:39:08
Speaker
That's framework and not cut corners when things goes out or when things are tough. Not everybody who does the process does the framework. Not everybody who knows and is successful. So knowledge is not enough. You need to have the tenacity, resilience.
00:39:26
Speaker
faith in the process and stay true to what you have decided, correct? These are some of the fundamentals my son cliched but in lending business, no words were more true, correct? This is what I learned that once you
00:39:41
Speaker
A. Do thorough research. Understand the nooks and corner of our list. For example, and just to give you an example, student loan, the only risk is not whether I give this money, whether this guy or girl will give me the money back or not. That's not the only risk. The risk is as wide as geopolitical risk. For example, if you're lending the course in US,
00:40:10
Speaker
It impacts your portfolio, whether Trump is there in the president or Biden is the president or somebody else's president, right? To those kinds of things. That is making for the effect, I'm saying, but it does happen. You say you create a lot of these cities where people go for an MBBS. Medical, right? And for example, when we were lending in 2008, by in 2010, I was making the policy, writing policy processes. That document still has that, it will not throw medical loans to China or Russia, UK.
00:40:39
Speaker
It's been written in 2008. Why so? Because of the risk. You would have to be accepted in India the degree. Yes, that was the main risk. Even if you pass out from there.
00:40:54
Speaker
doing a medical profession, their handle fraud is more difficult and challenging than India because the Negro have conjugal laws around those things. So that risk you run. Second, and there are different exams which are tougher to pass if you really want to practice there or get a job and all that. It's not only passing down.
00:41:14
Speaker
And if you want to come back, I will not allow you to practice unless you go through a process. Even most of them will not. Why isn't the person in the other way they wouldn't have gone there? So those risks, if you understand the nuances of risk well, I think you will do well. Second, most important thing, which is very underrated in lending business, zero to one.
00:41:42
Speaker
You must either know or get competence if you don't know yourself. Competence of connection. It's a different skill set, right? And it is not only going out, dropping on the door, being harsh. It is also a process. How do you do soft quality? What are the metrics to follow, so on and so forth? Know that new lenders do not have experience, especially some of the FinTech ones.
00:42:11
Speaker
They do not understand the importance of connecting money is a rigorous process. And you need to have that skill. So those are the things that I've learned over the period of time and which seems to be helping us now. Other than that, I think knowing the cost of compliance and governance is another thing which is underrated. So drawing regulations because
00:42:39
Speaker
Retain Finance, if you are getting into Retail Finance. Retain Finance is a thin-margin, high-volume transaction-heavy business. NPS, as I said, NPS is not the only cost, right? OpEx, cost of acquisition, but cost of compliance and governance. If you take wrong turn, knowingly or unknowingly,
00:43:02
Speaker
It may well be the end of your road, actually, because it's a very regulated business, right? So you are putting investors one year to this. Just knowing compliance and the name of the land and regulation is very important. Those are a few of the things I think. For them that, I think it's a great business to be in because your financial inclusion in a developing country changes lives and you have large impact, right? So it's a very fulfilling business also. For example, especially in education,
00:43:32
Speaker
So those are the things you said.
Data-Driven Lending Decisions
00:43:34
Speaker
So let me zoom in on these things, each of these. So you said risk connections with compliance. These are like three key things to get right in your 020 journey. Correct. So how did you get risk right at Google? Because now you're focusing on domestic lending. At Pradila, you are doing international lending. So with foreign universities, you have say average salary data.
00:43:55
Speaker
You have maybe some ranking data and things like that. There's a lot more transparency with respect to education quality, et cetera. How did you do that for India? Tell me about how you placed your risk engine, your decision making engine. Yeah. So look in the US also, while the data is relatively easily available, but you do need to find out the right sources and whether authentic sources or not and so on. So there's a lot of legwork there as well.
00:44:24
Speaker
So the nature of the work does not change. You need to do the similar kind of network, maybe a little more than what we had to do in the first four or five years of 2007 to 2012. But here, exactly the same, here you have an NIL at Banking for Engineering, you have a few other banking for MBA colleges.
00:44:45
Speaker
Then you will start understanding if it is a partnership business with edtechs, then you understand how the party is. So then there are public domain data available of whether the edtech is good edtech or not. It's not only a product, but the company will survive if you have given loan to the dead students and so on and so forth. With some of the edtech companies have gone bust and which have impacted the lenders because of that. So those are the risks you understand. So my answer to you, more specific answer structure is
00:45:15
Speaker
that it is a lot of hard work and work and research and one of the first things which I did about a year and a half back when I started on this journey is, and we have been doing, in fact, I've been doing this for a while, even when I was in Incred, we were looking at those spaces and I was in credit now and so we would get research of vocational courses and I was personally involved in that on some of the panels and stuff like that.
00:45:41
Speaker
So the work has been happening for years now, and all of that is culminating now and more focused on, let's say, engineering, so how many, which rankings to use, whether the data has integrity or not, and so on and so forth, and put your feet on the ground or get some agency, which is more authentic and so on and so forth. So those are the things happening as far as data is concerned. So we have a lot of work, a lot of information and knowledge there.
00:46:08
Speaker
And what were the scenes that you collected for each college? So background of college man got established from that point that, because education also is such an education, not education as a business.
00:46:25
Speaker
the more time you spend, the better it is. It is a high-touch business, so that's why trust takes a longer time. Harvard is Harvard because it took 100 years for them to reach. So right from the year they got established, who are the faculty, who are the founders, how many year the faculties are spending there, whether the faculties are coming out with research papers or not, what is the pedagogy, curriculum,
00:46:53
Speaker
modus operandi, infrastructure. A lot of these parameters anyways are part of the ranking parameters. A lot of agencies have RB and all of those things. So we use that. We also use the data industry. On this side, on the right side, we also do industry mapping work, which industry has higher potential or demand for professionals of a particular category.
00:47:18
Speaker
For example, in the US, you have high demand for next at least 5-7-10 years per STEM graduates. Large demand, less supply, so it is going to continue for a while. Simbanarminar mapping for India. So, which engineering stream other than which is the most obvious of computer science and IT?
00:47:37
Speaker
which are the other engineering streams which have potential to get better and higher paying jobs. So those are the things on the industry side we do and that we do the matchmaking and so on and so forth. So those are the things which we are connecting and stuff. Then there is a whole lot of data around the
00:47:56
Speaker
student and their profile, so plastic ads. For example, if somebody is in IIT Bombay and 9.7 CGPA obviously has a much better opportunity to get into a great college and because of that great job and so on and so forth. So, plastic ads and how many backlogs they have,
00:48:16
Speaker
We have gone now, going to the extent of now analyzing entrance trace scores, slicing. For example, somebody has given GRE or CAD or GMAT or TOF and O'Riles. What score has a higher potential of impacting what risk, right? So we'll let the things up. For example, grade score on quant
00:48:40
Speaker
less score on verbal may also mean that they might find it difficult in the soft-skinned sections to get a better job. Correct. So those are the correlations that we have started making. These are like self-declarations. The student declares what was his score. So we have to take as a part of the documentation process, we take this course. And a lot of these now are digitally available. So it's not so much of an ordinary days that you need to give documentation, we can pull this course from another sources. So those are the things which you will need.
00:49:10
Speaker
And the decision is a mix of potential of the student and potential of the course. Potential of the student. And again, we have converted that into a proprietary for credit score. So that's why every student gets a credit score. You can't rely on the traditional credit score because students would not have the credit. What about parents credit score? Does that factor in?
00:49:39
Speaker
Yeah, initially, over the years, the weightage has come down. It's rationing for our school. A lot of other managers still actually take either the collateral or parents' income as the main criteria for giving a loan, even the student, because they don't have the kind of finesse and the data analytics and the knowledge base there.
00:49:58
Speaker
But for us, over the period of time, we have been able to reduce the dependence of parents. So parents, now we are taking more for a, psychological reason and b, for contactability purposes. You are in a way enabling more social mobility. Kids got to poor parents, have as much of a chance as a kid got to a wealthy parent.
00:50:19
Speaker
In fact, a lot of students that we have funded in our pilot actually come from the humble background. They've got the meaning of it. We funded a few students who are in the construction labour and households and all of those things. Tell me about your collections process. What have you built over in terms of being an agile member and tech neighbour in collections process? Yeah, so it's not only collections, it starts
00:50:47
Speaker
for us with early warning sequence on the portfolio. So we have, because we have so much of data around the application data. Does the student remain engaged with KUHO after he gets a loan? What's the student journey? First take me there, and then we can... The student either files us out or we reach out to through campus catchments or through digital medium and all that, and then students will pay... And this was graduate courses.
00:51:11
Speaker
last week was graduate. We are also doing some product innovation on engineering. For example, we've launched the first mid-course financing product in India. So if you have done two years and third and fourth year, there is a product specifically available. So those are things also available, but coming back to that. And also online courses, like edtech courses, these kinds of courses also. All those.
00:51:36
Speaker
So if the student either comes to us directly through rich mediums or through a partner or through reference, whichever way they come and apply, give us an online link. Give us a student app that we have built which is getting released in the next couple of weeks and they'll be able to download. The very unique thing about that we have built in India is
00:51:56
Speaker
if the students can find out very quickly after giving a few data points, whether they are indigent or not, how much they are eligible for and what kind of broad donor model and other ways. And that I think for that, so my understanding last 15 years, the students and parents when they are doing the education planning for the kids and the students when they're doing it for themselves, they need quick answers to the fundamental question.
00:52:26
Speaker
A, whether I get a loan or not, I don't know. And if I don't, I am going to get a loan. How much am I going to get? And these two questions in Indian system right now also takes anything between few days to a few weeks. So you go and apply and then ask you for documents and then process it and then come back and tell you, it is not possible.
00:52:54
Speaker
That we have converted into our eligibility check very quickly. There is a decision of the branch. So that solves a lot of problems for students because then they are now clear what is the next road to step to take. So that is the journey. They can check their eligibility very quickly.
00:53:11
Speaker
And that there are, they will get options. If they want a little more loan, then what are the options? They will get it on the journey. If they want a little less loan, what is the journey? So on and so forth. They can kind of make their own loan. So that is the journey. Parents can have some collateral option to get more loan.
00:53:28
Speaker
If they are willing to give it largely. But our fundamental philosophy or guiding principle has been that I am on a mission to make Indian students completely atma-nirvana action. Because we have kohu as knowledge about which store, which student, which and all that, I can leverage that and then not
00:53:54
Speaker
not give as much importance to parents as the other guys. So I am allowing them to become self-sufficient or self-reliant. The other thing which I have noted over the years is Indian students are beyond comfort from middle class.
00:54:09
Speaker
So, they have a sense of commitment to their parents and families. They know that their parents have sacrificed a lot for them to reach wherever they have reached, their students. And given a chance, they would want to now take their own responsibility, especially for their postgraduate involvement.
00:54:28
Speaker
So, in a sense, I want to give them a chance to be able to do that. And you can do that if you understand what students, you can tell them, this is a good course, I like this course, please go ahead and do it. I think you would do well and so on and so forth. So, that is the journey. That is the philosophy. That is
Tech-Enabled Lending Innovations
00:54:45
Speaker
the journey. We have actually enabled this journey completely automated.
00:54:49
Speaker
So they don't have to come to any branch. They can do it online. They can check the status online. And now with the student mobile app coming, they can actually do all of these things on the mobile. And so once they, how does the load get dispersed? They need to show some proof that they have received admission, they have secured admission.
00:55:07
Speaker
Yeah, yeah. So the tuition fee as well as living expenses depends. And the tuition fee will be disbursed directly to the university. Oh, so you have these high ups with all of these universities. Yeah, yeah. So based on their disbursement, so the loan gets sanctioned for the entire course.
00:55:25
Speaker
What the fee payment schedule case is even dispersed. So the first semester fees are out. Your section let's say 10 lakh rupees and the first semester fees are two and a half lakh rupees loaded. So the living expenses will go to students which is normally about 20-25% of the world on a wall. And the tuition payment will go to the student. This is our unit. But this will happen all online.
00:55:51
Speaker
And this, the payment, the fee payment is automated. You directly have a relationship with the college or the student. You don't have to be in some university student shares the accounting. And once you've done it for one student for a university, then
00:56:09
Speaker
The account details are entered, you can verify next time someone shares it. If you have a lot of students from the same college, then somebody can do a partnership with them. Got it. And the dispersion is like for every semester, the student gets living expenses at the beginning of the semester. It's not like single time dispersion.
00:56:31
Speaker
No, no, single time, no, it is not single time disbursement. As in when the demand of the money is there, why can't I end this institute? So, it will be disbursed like that. But I'm sure that's happened. Is it odd demand? Like I can take just 1000 rupees today. It's awkward. If you want less also, you got 10 lakh rupees of sanction, your fees just due for two and a half, but you only want one lakh rupees, we'll disburse you one lakh.
00:56:58
Speaker
Oh, interesting. So this way, then he is engaged with you throughout his education. It's not like, why? In fact, in some cases, we do ask for how are you doing? CGPS are the target of your course progress and all of those things. So we are engaged there. Some of the students actually do come back and ask for some help in internships and project and so on. But then we can help them with that. That has been something.
00:57:26
Speaker
And how do you make sure that they've passed out, that they're not flunking, etc. You're sending them a notification asking them for details.
00:57:37
Speaker
Yeah, so look, you have done invariably 99% of the times your original underwriting is being so rigorous that these kind of students don't flunk. So even in those very rare cases, if something like this happens, we are engaged and students also, because they know, we keep telling them, like I told you, like, evangelizing, educating, you know,
00:58:01
Speaker
If anything goes wrong with you, please do inform so that it can take care of it. So the student comes back sometimes or sometimes we reach out and we know exactly, look, if somebody is going for, let's say, a fall of this season, we know exactly when are they supposed to pass out.
00:58:18
Speaker
Before we're passing out date or what, our team starts following them up, email goes, SMS goes, call goes, how's it going, where are you getting on-campus job has happened or not. So we have the data, right? We just need to put it in the process and that's what we did. And now the take is made it easy, the notifications go, the student, the app.
00:58:41
Speaker
can send a notification. But then once they get a job then they work out a repayment plan. That also is self-service. Yeah, they can do it. There is a plan already at the time of disbursement. If they want to change it, they can over the period of time. And you take NACH that's mandatory. That's mandatory.
00:59:02
Speaker
So this covers how you do your connections through multiple touch points and giving them flexibility to restructure as and when you got it. What is your way to meet that cost income target? You must have some cost income target.
00:59:22
Speaker
go the whole hall and out, plays out and so on. And I'm very happy and pleased the way it is right now panning out. Look, my philosophy again has been that in financial services in India, if you aren't solving any problem, whether it is for students or banks or for ourselves, our own parents, or anybody for institute, there is now a possibility to solve that problem through tech.
00:59:52
Speaker
That is a very distinct possibility. Almost everything can be solved. It's only you need to have the right talent approach and intent to be able to find and create the right product for flow and all. So my philosophy has been, this is what I've told my leadership team, very powerful, very high-profile leadership team, I've been able to hire.
01:00:14
Speaker
I think the approach is that if you are solving a problem, first, get me your tech solution to that. It has been a legacy thing in India because of chief network that if you have a problem, throw people at it. Whether it is distribution also, if you want to solve, let's say, customer onboarding or acquisition, you will say, I'll recruit a DSA and DSA will hire four people, and I'll hire 10 people, 100 people, 1,000 people, and then go and collect documents from the street.
01:00:43
Speaker
My sense is that my approach is that, why do we need this? A student has the document, they have on their fingertips, their mobile and whatever, and they want to learn and they are very keen to share information because this is in their favor. I just allow them to do it seamlessly.
01:01:05
Speaker
And if you do that, you have actually eliminated a lot of, so one big cost in retail finance, because it's a people in that's a business people, acquisition acquisition, even processing action. Once the file comes, the credit processing over the last few years has become pretty automated, right? Like even bank, no, not for, no, not for, it has become automated for credit cards and personal loans to a large extent.
01:01:36
Speaker
Because those are smaller loans and credit card is pretty much given to people who are known in the financial system, who have died of Bureau score and all that. In this, for example, what it is, it's not as easy as a personal loan because of obviously property documents and so on.
01:01:51
Speaker
There is a lot of processing which happens at the back end, whether the property papers are original, whether the property papers aren't right, the funding documents are there. Similarly, in student loans also, there's a lot of processing with the existing land desert. What we've done is we've automated that as well. So we've done digital records, we are extracting information, so on and so forth.
01:02:14
Speaker
To a large extent, we are kind of innovating at the back end processing as well. So for example, the entire, so a lot of information, A gets collected and then B gets processed. So, application information, past account information, future information, which college, which course, admission, I-20 visa, all of those things and so on and so forth. All this information needs to get processed. Now, this information
01:02:42
Speaker
Right now, with other NANDIs are getting processed nationally, physically. They need to download the document. Somebody needs to say it and find out. This VM is kind of automated again. So you're using like computer vision to scan the document? Yeah, we are.
01:03:00
Speaker
In fact, students also can actually take pictures and upload documents in the journey and all of those things, instead of sending it on email or WordTrap, which is by definition called a digital journey, but according to me, it's not a digital journey because you are attaching documents and sending an email. So those are the things which are changing.
01:03:18
Speaker
The document verification is also done through computer vision, whether the mission has been granted, whether the visa is granted or not. So those are the things which you are... Like it's able to parse what is the date of validity and so on and so forth, all of that. Most of it has already happened as a standard, for example, bank statements are now pretty much centered on parsing and on-go side.
01:03:42
Speaker
But some of the other academic documents, especially in this domain... So you've created like, you've built that ability in-house to read. Like your sister can read a box sheet and translate that into numbers and then work in progress and see the algorithm.
01:04:00
Speaker
Yeah. Amazing. And how did you cut your customer acquisition costs? How do you get leads? Get the customers, right? Fortunately, we are in a business where the customer is the most internet and social media customer that you can never ask for, right? They are there. Whosever is either going or studying right now, they're in some of the other virtual site. As long as you know the customer and that light cycle, so we have mapped
01:04:29
Speaker
Anybody who is going to US, anybody who is studying in India or planning to study in India, we are back backwards about 24 months, forward about 30, 40, 36, 48 months, 60 months. So, you know exactly at what point of time the customer is doing what and then you can go and... So, that knowledge is more important while digital sourcing can be very costly and is very costly for a lot of people because they don't know where the customer is.
01:04:57
Speaker
So they are, I think, shooting in the dark and going to Google and search and all this and keywords and stuff. But if you know exactly what that student is doing at what point of time, there is a catchment. We do a lot of webinars actually.
01:05:12
Speaker
where we tell people five things you need to know about this, finance, ten things you need to know about visa, seven things you're not able to do. So those are the things of catchment. Go to campuses and create, understand the pain points there. So the institutes need to connect fees and it gets delayed and all that. Can we send and partner with them and they can send the emails. So those are the things.
01:05:41
Speaker
And what percentage of your leads come through Institute time? Say, if I'm applying for admission to MIT. A partnership, not only absolutely. Yeah, a partnership is a channel. And within partnership, universities, institutes, and colleges are there. And within partnership, there are, for example, test prep centers, if somebody is going out or in it. So you partner with them. So within partnership, there are student
01:06:08
Speaker
tech companies or discussion forums and all that. Those kind of people knew because it's enabling complementing product for them also. So partnership is a big challenge.
01:06:24
Speaker
and then you go and partner with them and they'll forward. Digital is one channel, digital social media, and then referral is a very strong channel because students usually work in cohort. One of my friends, I am going to one of my four of my friends also will do the same. And if I got a good experience and a good product, then I will very well tell the other people. So referral is a very strong channel.
01:06:46
Speaker
And do you do something to drive more referrals, like giving some benefits?
Funding and Future Ambitions
01:06:51
Speaker
I do, yeah. We do some, again, work in progress continuously, getting involved, but yeah, we do some vouchers, Amazon vouchers, and some gadgets, and so on, and so forth, for good reference, converted.
01:07:06
Speaker
How did you get it off the ground in terms of funds? You need funds before you can get it out. I got very lucky actually. I got an investor which is one of the largest private equity funds in the world called Westbridge Capital. And Westbridge Capital, now if I'm not wrong, about $89 billion fund that we invested has seat about $20 million in total. One of the largest fund funding in last two years in India.
01:07:34
Speaker
So I got Nati, I had great investors, I understand India, they know education, they're very keen on education and the space and financial services. They're investors into equities, some of the very good companies, star help, insurance and all that. So they've invested into food. So I got... Do you see this being largely domestic lending? Of all domestic costs?
01:07:59
Speaker
Even though this strategy, my focus is on domestic courses. However, because as a brand, I want to be the one-stop solution for any Indian student who's planning education finance.
01:08:14
Speaker
But to that extent, we will offer all the diet products sweet, which includes Indian students going abroad. In fact, right now, largely the landing has been to abroad because the season was for. But going forward, my focus more and more is going to be on India.
01:08:30
Speaker
MBA engineering, small ticket certification courses, executive education, and so on. So this is the focus because that's what the large need also. There could be an interesting play on this user base of students who are starting their career. You could, for example, be the place from where they get their first credit card once they get into a job. So are you looking at building out those other products to cross-sell and up-sell to the same one?
01:09:00
Speaker
Stolen my thunder! This is to be more on one serious note. This is invariably the first serious financial product in our student life. And by the virtue of the product and nature of the product, we are wired customers pretty early in their life. Anything between depending on which segment you are addressing, if you're addressing get well, which we are not right now, but 16 to 24 or so.
01:09:30
Speaker
Invariable to the first product and this is a very emotional product for them. So the bonding is much better entrance process. So there is a relationship bond. Now and I know exactly because of last 15 year to experience, what are the other product at what point of time they will need?
01:09:51
Speaker
Once they pass out, if they're abroad, they will need a credit card, as you rightly said. In India, they might need a small-ticket personal loan for paying deposit, or buying a souvenir, or bike, or something, right? So, these products you've already had. We know exactly what they will need over the period of years. So, we have mapped about, they will, anybody, you, me, anybody will work for 35-40 years with them, right? First 10 years is this, and then next 10 years is next.
01:10:21
Speaker
And how would take architecture is such that we'll be able to maintain, leverage this relationship funnel that we have created. And use tech and analytics. Our analytics engine is very rich as we have spoken of data science team working at it and all that. So we'll be able to predict all of these things at the right time, right place.
01:10:40
Speaker
So we will have all the infrastructure recognized for this. At what point of time will depend on macro conditions, micro other things, how compared, what are we at that stage in terms of scale operations and so on and so forth. But yeah, largely at 30,000 feet above, I would like to be more engaged with students and facilitate more products with them as much as I can.
01:11:06
Speaker
Would you do this on your own books? Say, a two-wheeler loan, which would, I guess, be the... No, as of now, it's too hard. You would do this through partnership. I want to be focused on what I do the best, right? I know the business deeply, and we want to leverage the domain expertise and be focused, and this is a very large opportunity, and sadly, underserved.
01:11:27
Speaker
So for next lot of years, if I'm doing the right things and we are doing everything that needs to be done in this segment, I think we have enough and more market opportunity to not look out and become the best.
01:11:43
Speaker
better than the best player that there could be in India, right? And then probably global cause the domain expertise, the admin, all of those things. So, um, strategic priorities or, or, or compulsions, not just standing future. I will want to stick to the core component that people. So what's like a broad 30,000 feet above the ground kind of a target in the next couple of years that you have it.
01:12:11
Speaker
Let me give you a slightly longer version, if I am building this company further, if I may. It did not take about 12-14 years to build a building on the book. I think we
01:12:27
Speaker
We'll be able to do it in the 50-60% of that time. So that's a broad range of where we can go. And how many student loan companies are like a billion dollar plus in terms of their book? In India, private money has nobody except for gridlock. Oh, wow. Amazing. Amazing. Amazing.
01:12:46
Speaker
And that brings us to the end of this conversation. I want to ask you for a favor now. Did you like listening to the show? I'd love to hear your feedback about it. Do you have your own startup ideas? I'd love to hear them. Do you have questions for any of the guests that you heard about in the show? I'd love to get your questions and pass them on to the guests. Write to me at adatthepodium.in. That's adatthepodium.in.