Digital Bank Jupiter gets NBFC licence from RBI, plans to enter credit business

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Jupiter, a neobanking platform in India, has secured a non-banking financial company (NBFC) license from the Reserve Bank of India to expand its lending business. The move is expected to increase its disbursal rate by 100% for the year. The founder of Jupiter, Jitendra Gupta, shared with Moneycontrol that the startup was lending through an NBFC under the Loan Service Providers (LSP) model, but the process was cumbersome and not economically feasible. With the new license, Jupiter will be able to scale its business quickly.

Gupta added that Jupiter was partnering with an NBFC for lending, but the process was not easy to make economic revenue. With the new license, the company will be able to offer loans through Amica Financial Technologies, a private entity that operates Jupiter. Gupta further stated that the license will enable Jupiter to have better control of its destiny, offer better access to customers, and chase scale in a more formal way. The company will also have direct integrations for the KYC process, which will make it easier to onboard new customers.

Gupta also mentioned that the license will help the company overcome regulatory hurdles and uncertainties. Today, there are grey areas around First Loan Default Guarantee (FLDG) under the Digital Lending Guidelines, scrutiny on what is allowed and not allowed in digital lending, and loan app bans. Jupiter aims to address these issues with the new license.

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To date, Jupiter has disbursed small ticket loans of less than Rs 50,000 with a tenure of 3-6 months through Trillion Loans NBFC. With the new NBFC license, Jupiter will expand its lending services to offer loans ranging from Rs 50,000 up to Rs 1 lakh. Gupta confirmed that the company will continue its existing partnership and lend through both models for some time. Jupiter will tap into new customers for the NBFC license.

Jupiter provides a platform with a simplified user interface that allows users to deposit and withdraw funds. The company also offers debit and credit cards in partnership with traditional banks such as Federal Bank. With the new NBFC license, Jupiter can take up co-lending with banks, which Gupta sees as a big opportunity for the company.

In January 2023, Jupiter raised Rs 100 crore (about $12.5 million) in venture debt from Alteria Capital to scale and expand its lending products in India. In 2022, the startup raised around $87 million from Tiger Global, QED Investors, Sequoia India, and Matrix Partners. Gupta revealed that Jupiter will infuse its own equity of Rs 100 crore and will be looking to raise an additional Rs 100 crore loan from banks to develop the NBFC product.

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Since its inception in August 2019, Jupiter has raised over $160 million (Rs 1,300 crore) in private market funding. The company recorded a total revenue of Rs 19.3 crore in FY22 and presently has a disbursal run rate of Rs 25 crore a month (around Rs 300 crore a year). Gupta’s internal goal for this year is to clock around Rs 600- Rs 700 crore of disbursement, which will increase the revenue profile, and the license will enable Jupiter to make a 2-3% more margin.

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