While there are many Indians with bank accounts, only 30 million Indians have credit cards. In South Asia, the adoption rate for plastic cards has been stagnant over the past few years.
India's credit rating system is still relatively new and only covers a small fraction of its population. Banks don't have the sophisticated underwriting systems or the risk appetite to try to move the needle.
Slice, a startup based in Bangalore, believes it has the solution. The startup has years of experience issuing cards to young professionals without traditional jobs. On Wednesday, Slice announced that it will launch a card with 2,000 Indian Rupees ($27) to tap into the nation's potential market of 200 million people.
Rajan Bajaj is the founder and chief executive officer of Slice. He said that the startup's new credit limit card, which is significantly lower than the industry's lowest at $270, was designed to help people who don't have great credit scores or any credit score.
The startup has recently disbursed as many as 100,000 super cards to its users every month. It does not charge any annual fees or joining fee for its new card, and offers the same benefits as its supercard.
Bajaj stated that the startup can offer this card because it has spent many years creating its credit underwriting system.
We have been actively investing in the development of a robust risk infrastructure over the past few years by using data science. It is impossible to scale a business with such robust risk management capabilities and create a product that is truly inclusive. Once you have the ability to build it, nobody can stop your growth. Our NPA stands at 2% with a 50% increase in m-o-m, which is a testament to our credit underwriting abilities.
Rajan stated that the startup reached the $27 figure as it believed this amount would still allow users to make meaningful transactions. Rajan also said that by correctly using this limit and paying on-time, users can get approval for higher limits immediately.
He told TechCrunch that he is confident that this will motivate users to give us additional information to help them increase their credit limit.
The startup raised $20 million in funding two months ago and is planning to issue approximately 1 million cards by March 2019.
It could raise even more money in the near future. The startup is being pursued by investors to fund a new round of funding of approximately $100 million. This valuation will be significantly higher than the previous round. Rajan declined comment to discuss fundraise discussions.
