Moneyboxx Finance: Creating a future for micro-enterprises through affordable funding
THE 20 MOST TRUSTWORTHY COMPANIES TO WATCH IN 2023
The Micro enterprises segment is the backbone of Indian economy with significant contribution to employment and economic activity. However, these enterprises, especially in rural India, are unable to grow due to limited availability of credit due to inadequate business documentations, credit history and collateral. Landscape of lending to microenterprises is changing with NBFCs adopting innovative business model making use of technology and expanding their presence in rural India. Digital technologies are being used more frequently now than ever, increasing opportunities, productivity, and income for micro and small entrepreneurs.
Moneyboxx Finance is one such NBFC that is driving financial inclusion by providing unsecured and secured Vyapar loans to micro enterprises in a transparent and cost effective manner. The company is ranked among the 20 Most Reliable Companies To Watch In 2023 due to its unique strategy for micro enterprise business financing.
Journey of Excellence
Moneyboxx Finance focuses on financial inclusion and empowerment to meet the unmet credit requirements of microbusiness owners in Tier-III towns and beyond. The company has a branch network of 56 branches spread across six states: Rajasthan, Haryana, Madhya Pradesh, Chhattisgarh, Punjab, and Uttar Pradesh. By providing unsecured and secured business loans varying from INR 1 to 7 lakhs across essential sectors like livestock, retail traders, kirana, micro-manufacturing, and services, Moneyboxx empowers micro-entrepreneurs.
Through its distinctive “phygital” model, which uses technology to maximize efficiency and scalability while ensuring strong customer connections through an on-the-ground presence, the company has successfully served the MFI+ market. Moneyboxx has improved the lives of more than 30,000 borrowers with total gross disbursements of over INR 500 crores. 53% of these were female, and 35% had never had credit. The company supports long-term socio-economic development in addition to direct financial inclusion through various impact initiatives outside of lending, such as agroforestry programs and free veterinary consultations for agricultural farming and dairy borrowers.
Dedication to Stay On-Board
Rural India got only 9% of the banking credit despite making up 65% of the Indian population and workforce and contributing 47% of the India’s national income. Moneyboxx claims that micro-businesses in Tier III and lower towns are severely underserved, with a credit gap estimated by IFC at INR 8 trillion in 2018. To promote financial inclusion, the company offers business loans to deserving microentrepreneurs.
Fighting Off The Challenges
Micro enterprises have their unique set challenges, making it difficult for the traditional financial institutions and Fintechs to evaluate their credit worthiness and provide financing solutions. The following are the main challenges:
- The borrower lacks adequate business documentation (ITR, GST, banking, and books of accounts).
- Having no or limited credit background
- Offering no or inadequate collateral security
- Little to no online footprint
In view of these challenges, traditional lenders perceive this sector as high-risk due to lack of adequate information and high transaction cost considering relatively small loan ticket size. However, Moneyboxx has a proven business model for catering to this segment by adopting a unique phygital business model which involves a relationship-assisted branch model powered by technology.
Taking A Distinguished Approach
Moneyboxx is dedicated to making a difference beyond providing finance. In addition to providing impact financing, the company is also implementing various impact initiatives in collaboration with CSR partners to increase its borrowers’ farm income by planting fruit-bearing trees. Allowing multi-fold increase in income over the course of the loan transforms the lives of underserved borrowers by providing credit for acquiring assets, income generation, and working capital. Within three years of taking out a Moneyboxx loan, borrowers, particularly those with cattle loans, can double their income. The company has served its customers in a distinguished manner.
The following are a few of them:
- Moneyboxx has highly scalable, completely digital, and asset-light business model with digital approach right from on-boarding to collection, monitoring, and disbursement. Its relationship-based approach, data-driven underwriting models, and strong customer connections through the branch network ensure strong underwriting and collection
- The company has top-notch asset quality in the unsecured loan sector despite the strain brought on by the once-in-a-century pandemic. In addition, it fares better than its peers in the segments and big secured loan players of comparable size—the low GNPA of less than 1% results from the strong underwriting practices and collection mechanism. With an emphasis on essential sectors and segments, Moneyboxx’s AUM is well-diversified geographically providing stability to portfolio quality
- Due to its strong operating model, the company has regularly added new lenders with increasing vintage and AUM and is currently supported by 24 lenders, including leading banks, NBFCs and impact funds
Embarking The Trust
Borrowers with credit needs of INR 1-10 Lakhs, known as the “Missing Middle,” is the most underserved segment in India, especially, in rural India. Moneyboxx addresses credit needs of this segment and is transforming lives of the micro entrepreneurs by providing impact financing and various beyond-lending initiatives such as free vet consultancy services for livestock borrowers and agroforestry initiatives for borrowers with agricultural land. Through these numerous beyond-lending initiatives and customer-centric approach, Moneyboxx has gained the confidence of its customers. The company deeply understands its customers by directly connecting with them without involving any intermediaries, emphasizing a relationship-based approach rather than a product-based strategy. By offering loans for income generation purposes and hiring local talent in these regions, Moneyboxx Finance significantly contributes to regional economic growth and fosters financial inclusion. It has a long-term socioeconomic effect.
Through its relationship-based strategy, customer-centric approach, branch-based operating model powered by technology, Moneyboxx has established strong relationships with its borrowers. The company believes in long-term relationship with its borrowers wherein its team of relationship officers and impact officers (vets) are in continuous touch with the borrowers for their financing needs and beyond-lending impact initiatives.
Moneynoxx Financing Solutions
- The Moneyboxx Vyapar Loan (Unsecured) is explicitly designed for microbusiness owners and offers fast, easy access to credit. This loan varies from INR 70,000 to 3,00,000, and its term spans between 12 and 36 months. It is available to help small businesses in the trading, manufacturing, service, and livestock sectors for their business needs.
- The Moneyboxx Vyapar Loan (Secured) is designed for customers seeking higher loan amount for a longer tenure and have some property to offer as collateral. The loan term is between 36 and 60 months, and the loan amount varies from INR 3,00,000 to INR 7,00,000. The loan may be used for asset purchases, working capital requirements, or business expansion.
A Proactive Launch
Moneyboxx introduced secured business loans this financial year to cater to unmet credit needs of the borrowers. With the aim of driving financial inclusion in “Bharat”, Moneyboxx aims to have AUM of about INR 1000 crores and 100 branches by FY24.
A Memorable Journey
The co-founders of Moneyboxx, Mr. Deepak Aggarwal and Mr. Mayur Modi, say that establishing the company was challenging and gratifying. Finding the market gap was the first step in the quest. After conducting extensive analysis and research to determine market and demand, they set a business plan to address those requirements. The co-founders successfully established Moneyboxx after navigating the legal and governmental requirements and set up a sustainable and successful business model by having the right strategy and team onboard.
Along with managing business, achieving growth plans and managing risk, the cofounders also had to deal with challenges created by the outbreak of pandemic. They contend that managing risk is critical for all financial institutions. To ensure that the activities were sustainable and profitable, they had to put strong risk management processes and systems in place. They eventually arrived after a challenging but rewarding journey.
Co-founders, Mr. Deepak and Mr. Mayur counsel aspiring business people to concentrate on the following crucial areas:
- One must thoroughly understand the industry they intend to operate in before starting any business. It entails comprehending the wants of the clientele, the competition, and any regulatory requirements that might affect the company.
- Young businesspeople should surround themselves with people who share their vision and values, have complementary abilities, and are like-minded. The development of a mindset of cooperation and ongoing education is also crucial.
- Any company must have financial management discipline. Mr. Deepak and Mr. Mayur can vouch for this since they founded Moneyboxx Finance. One must ensure a solid financial plan, prudently invest in their company, and effectively manage their cash flow. They should also monitor their finances and frequently review their financial statements to make wise choices.
- Innovation is essential to keeping ahead in the fast-paced business world of today. Young businesspeople should always be on the lookout for methods to enhance their offerings in terms of services, products, business operations, and processes.
- The co-founders of Moneyboxx think networking and teamwork are essential for any business, particularly for young entrepreneurs. As a result, one should attend business conferences, join trade associations, and network with peers in their industry. In a nutshell, collaboration can lead to new ideas, alliances, and opportunities.
According to Mr. Deepak and Mr. Mayur, starting a company is a complex but rewarding process. Concentrating on these essential areas can improve their chances of success and create a long-lasting company that positively affects the world.