Exclusive: P2P lending startup RupeeCircle bags funds from Mahindra Finance

Mumbai-based peer-to-peer (P2P) lending startup RupeeCircle will receive Rs 4 crore (around $588,000) from non-banking financial company Mahindra Finance, a top executive from the startup told TechCircle.

According to a regulatory filing of the publicly-listed company, Mahindra Finance will have 13% shareholding in the startup.

RupeeCircle has also applied for a P2P licence from the Reserve Bank of India, Ajit Kumar, co-founder and chief executive of RupeeCircle, said.

Run by AAPCA Demystifying Data Technologies Pvt. Ltd, RupeeCircle was launched in January 2018 by Kumar, Abhishek Gandhi, Ashish Mehta and Piyush Saurabh. Like all P2P lending firms, the startup connects borrowers and lenders on a single online tech platform to facilitate loans.

Kumar and Mehta are alumni of Indian Institute of Technology, Bombay. Saurabh is an MBA from Management Development Institute, Gurgaon and Gandhi is an MBA from Erasmus University, Netherlands.

RBI’s norms

In October last year, the Reserve Bank of India issued norms for P2P startups, categorising such firms as non-banking financial companies. Among the various norms specified by the banking regulator, the NBFC-P2Ps have to obtain a certificate of registration from it, have a net-owned fund of not less than Rs 2 crore or as specified by the RBI, and they can only operate as intermediaries by providing users a platform to facilitate loans.

Several P2P incumbents that VCCircle spoke to last year said that some of the provision could negatively affect the nascent, unregulated P2P industry. Capping the exposure of a lender at Rs 10 lakh is severely restricting, said experts. Also, the having at least Rs 2 crore as net owned funds is unnecessary as P2P lending is not a capital intensive business as major spends for P2P startups go towards tech and salaries.

Since then, a number of P2P players have recently secured a licence from the RBI, including Delhi-based Fairassets Technologies India Pvt. Ltd, which operates Faircent; Hyderabad-based Fincsquare Fintech Pvt. Ltd, which runs Peerlend.in; Mumbai-based Bridge Fintech Solutions Pvt. Ltd, which runs Finzy; Bigwin Infotech Pvt. Ltd; Ohmy Technologies Pvt. Ltd; and Bengaluru-based Cashkumar.

Deals in the space

Obtaining a licence has helped a number of P2P startups raise funding in the past few months.

In May this year, Cashkumar raised angel investment of Rs 5 crore (around $735,000) through deals platform LetsVenture.

In early May, Mumbai-based fintech firm BigWin Infotech Pvt. Ltd, which owns yet-to-be-launched P2P marketplace PaisaDukan.com, raised $225,000 (Rs 1.5 crore) from a group of undisclosed angel investors.

In April, Finzy raised $1.3 million (Rs 8.4 crore) in a pre-Series A round of funding.

In December 2017, Faircent secured Rs 25 crore ($4 million) in a Series B round led by new investor Incofin Investment Management, a Belgium-based social impact firm.