Niro hits Rs 1,000 crore disbursement milestone with fintech partnerships

The uptick in credit disbursements follows closely on the heels of the firm reaching its previous milestone of Rs 500 crore in August last year

Indian fintech startups in the embedded finance ecosystem are operating as catalysts for two distinct ecosystem players; those engaged in financial services, and others who cater to the consumer technology companies. 

Niro, an embedded consumer lending platform, is one of the fintechs operating in such a space. It embeds credit offerings to over 10 consumer tech firms including names such as ShareChat, Quickr, NoBroker, Snapdeal, among others, in collaboration with its lending partners. 

Within 27 months of its launch, Niro, has touched a key milestone of Rs 1,000 crore in lifetime credit disbursements. The recent uptick in disbursements follows closely on the heels of the firm reaching its previous milestone of Rs 500 crore in August of last year. 

“It is a testament to the traction we are seeing from consumer internet platforms as well as from those on the supply side; our lending partners,” Aditya Kumar, co-founder and chief executive of Niro, told Business Standard. 

Kumar attributes growth in business to broadly two major factors; scalability of consumer tech platforms and lenders, and consumer platforms realising potential ways of monetising their end users. 

“I think consumer tech platforms have figured out there is revenue to be made with (embedded lending). As a result of that, their interest to actually work on scaling, marketing, enhancing discovery, and prioritising success of these platforms increases with a period of time,” he said. 

When it comes to expanding credit partnerships with banks and non-banking financial companies (NBFCs), Niro has plans to have about 18 lending partners in the next six months, up from the current 10. Kumar hopes to have about 25 such partners by March 2025. 

“The idea is to grow the partner side. I think once we get to 25, we will have access from a distribution point of view to a majority of India's digitally active universe,” he said. 

Kumar explains that once enhanced lending partnerships are in place, the company can tap into a set of diverse lending products, going beyond the current offering of personal loans. This may include used-car refinancing, gold loans, business lending in the form of micro, small and medium enterprises (MSME) loans, among others. 

“But the focus right now is just on building up this distribution,” he affirms. 

Launched in 2022, the company was founded by entrepreneur Aditya Kumar and former Citi executive Sankalp Mathur. 

Niro is Kumar’s second venture into building a fintech company. In his previous avatar, he built an origination platform for personal loans named Qbera in 2015.

Later in 2020, InCred Management and Technology Services, a wholly-owned subsidiary of InCred Financial Services, acquired the company for an undisclosed amount. Here, Kumar led the consumer lending vertical under the InCred banner.

Opportunity

The company is part of an expanding sector that is expected to grow at a compounded annual growth rate (CAGR) of about 30 per cent between 2022 and 29.

Revenues generated through embedded finance are expected to rise from $4.8 billion in 2022 to $21.12 billion in 2029, according to a PwC India report. 

For Niro, partnerships with major startups in the country have opened up over 250 million monthly active users. Out of these, the Bengaluru-based company has pre-approved 35 million, or about 14 per cent of users, to extend credit offerings. 

Navigating challenges

Meanwhile, as the Reserve Bank of India (RBI) tightened regulations by increasing risk weights for personal loans and credit cards last year, Kumar explains that the company had to keep up with the regulatory developments.

“I think, from a velocity perspective, we had to keep up with those changes because we are dependent on third-party capital for our lending. Across the industry, a lot of work has gone into keeping up with revised compliance standards, KYC (Know Your Customer) norms, among others,” he said. For now, the company is banking on its distribution-led strategy, rather than building its own balance sheet aka applying for a banking licence. 

“The idea is to double down on the distribution, the data and product creation. The focus is on building out the platform and adding more suppliers of capital rather than building our own balance sheet,” he said. 

In its first year of operations in financial year 2022-23 (FY23), Niro has earned about Rs 10 crore. Its topline rose by over three times to 35 crore in the last financial year (FY24).