Santanu Agarwal: Creating seamless banking solutions for India's poorest

Paisalo taps into the Rs 8 lakh crore market opportunity of small ticket loans for India's 365 million unbanked population

Salil Panchal
Published: Feb 11, 2021 10:46:27 AM IST
Updated: Mar 19, 2021 08:50:42 PM IST

Life is not a template and neither is mine. Like several who have worked as journalists, I am a generalist in my over two decade experience across print, global news wires and dotcom firms. But there has been one underlying theme in each phase; life gave me the chance to observe and tell a story -- from early days tracking a securities scam to terror attacks and some of India's most significant court trials. Besides writing, I have jumped fences to become an entrepreneur, as an investment advisor -- and also taught the finer aspects of business journalism to young minds. At Forbes India, I also keep an eye on some of its proprietary specials like the Rich list, GenNext and Celebrity lists. An alumnus of Xavier Institute of Communications and H.R College of Commerce and Economics in Mumbai, I have worked for organisations such as Agence France-Presse, Business Standard, The Financial Express and The Times of India prior to this.

santanu agarwal paisaloImage: Amit Verma

Santanu Agarwal | 24
Deputy CEO, Paisalo Digital

An idea to create seamless banking solutions for India’s bottom-of-the-pyramid segment emerged when law graduate Santanu Agarwal identified concerns these people faced after field trips in 2016-17 to remote parts of the populated state of Uttar Pradesh.
“The potential to offer small-ticket-sized loans—of ₹25,000 to ₹30,000—to the unbanked in India is huge,” says Agarwal. This is estimated to be a ₹8 lakh crore market size, based on India’s unbanked population of 365 million.

To tap the unbanked by mobile, Agarwal hired a team of engineers to build the digital application in 2017, to be backed by biometric-based e-KYC to tap customers.

This, over the next three years, has transformed the brick-and-mortar financial lender SE Investments—which Agarwal’s father Sunil Agarwal set up in 1992—into a non-banking financial company which caters to the unbanked, bottom-of-pyramid segment of society, through a priority sector co-lending model with public banks.

Four years ago, the Paisalo app used to disburse around 100 loans a day, estimated worth ₹5.5-6 crore a month. The number of disbursals and the estimated value of loans given per month have jumped approximately five-fold since then. The loans are offered at an extremely low 12.4 percent interest rate.

Paisalo reported an 81 percent rise in revenues and a 19 percent rise in assets under management in the first half of FY21 compared to levels in March-end 2020. Over the next two years, it plans to expand its co-lending with banks and possibly apply for a small finance bank licence.

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“We like Paisalo’s stable business model. With fintech penetration very low, the runway ahead is huge. Paisalo rightly positions to ride on this scale,” says Saum Mehra, portfolio manager at Singapore’s Davos International Fund, which has been an investor into Paisalo since 2010.


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(This story appears in the 12 February, 2021 issue of Forbes India. To visit our Archives, click here.)

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