Bon Credit to tap informal sector in Hyderabad The company lends through its Bon Cards and offers financial services to the self-employed.

Pune-based Bon Credit, which offers financial services to the self-employed like drivers and delivery boys and other trades, is planning to launch its Hyderabad operations soon. It will set up a regional call centre here and several kiosks to offer its products, said its founder Bhasker Kode.

The company, which raised funds in 2017 from Omidyar Network, offers everyday working capital to taxi and cab drivers, delivery staff, home chefs, vendors and others associated with various service aggregators. According to Kode, these people find it difficult to access credit as many financial institutions lend only to the salaried class.

The company lends through its Bon Cards. These cards, which look like credit cards, are accepted at the point of sale. The payments have to be related to the trade. For instance, if a driver takes a loan, s/he can only use that to pay at the fuel station, tyre repair, servicing, mobile recharge and other such designated purposes. “The idea is to ensure that the money taken on the loan is spent to enhance their livelihood,” he said.

It is now working with a few non-banking financial companies, which do the lending. It gets a revenue share for allowing the NBFCs to use its software. The interest rate is about 2 per cent a month and the loan ticket size is Rs 800 to Rs 5,000 a week. The tenure is up to 30 days. Bon Credit, through its banking partners, also opens bank accounts for those who are not in the banking fold yet, he said.

“We are studying fuel usage patterns by cab drivers in Hyderabad. This will allow us to customise credit products for them. We will look to partner with NBFCs. We will tap the toll payment channel and have plans to extend loans to about 25 domains. We will draw up a list of activities for which payments can be made through Bon Cards,” Kode said adding that loan default is low due to the smaller loan size. Also, the daily earnings enable them to pay the loan at the earliest.

The company also plans to work on multiple data points, including work activity on aggregator platforms to assess the creditworthiness of customers

According to Kode, the informal workforce, though huge in number, is one of the most financially underserved segments. “Many freelancers like chefs or plumbers cannot get a bank loan. Even on the investment front, many products have rigid payment schedules,” he said.

Present in Bengaluru, Mumbai, Patna, Guwahati and other cities, it has about 30,000 customers and has enabled about four lakh microloans.