At a recent event in Mumbai, I had the chance to meet Mukesh Bubna and understand his vision behind Monexo – a Fintech venture focused on enabling investors to earn profitably by directly investing in collateral free loans. As I have been pursuing the IFA cause, I immediately smelt a business opportunity for my IFA friends.
What struck me immediately was Mukesh’s prolific banking background and his ability to draw upon several decades of his stint with Citibank to introduce a unique, marketplace approach to borrowing and lending in India. Monexo, a P2P lending platform based in Chennai enables individual investors to become online lenders and earn stable returns by lending to borrowers who are looking for a personal loan to fulfil their financial aspirations.
So, here are some key takeaways from my discussion with Mukesh
1) Mukesh – you’ve held several prominent leadership roles within Citibank for nearly two decades. What prompted you to leave and start Monexo ?
My experience across several facets of the retail lending ecosystem ranging across product, sales and operations helped me understand how banks have traditionally managed consumer credit.
On one hand – they follow rigid, outdated screening processes which exclude several creditworthy borrowers from mainstream access and this results in a poor customer experience. Meanwhile, on the other side, bank fixed deposit investors earn almost next to nothing on their investment.The interest margins on the loans are completely wiped off by the bank.
I started Monexo to help provide borrowers with an easier, more reliable route to credit by matching them directly with individual lenders looking for attractive returns. At Monexo we want to bring decades of professionalism, technology and data science expertise to provide investors with an opportunity to invest in a new asset class – collateral free, personal loans.
2) Who are the other people behind Monexo – are they also from the banking world?
Monexo has an extremely experienced promoter team with expertise across banking and technology. My two co founders, Sundar and Sonal have 45+ years of professional experience between them.
Sundar is an experienced chartered accountant who has built credit models for global and domestic lending institutions like Deutsche Bank and HDFC. Sonal leads our efforts in building and scaling technology and she comes with around 15 years of global exposure to strategy and technology operations experience with Tata Consultancy Services.
We also have an engaged advisory board comprising prominent individuals from the Private Equity and NBFC space.
3) Sure – isn’t Peer to Peer lending relatively new to India ? Are they any metrics which validate the success of this lending model globally ?
The P2P model has met with tremendous success globally in developed economies over the last decade. Platforms like Lending Club (USA) and Zopa (UK) have issued $20 bn+ of loans.
RBI’s decision to regulate P2P lending in India is a huge advantage as it brings P2P lending on par with asset classes like MFs, equity, bonds etc.
Investors globally have really taken to this asset class as it provides diversification and higher yields compared to traditional instruments like bank deposits
These platforms have laid down global benchmarks for the P2P lending model and at Monexo we are bringing these best practices to India.
4) Could you elaborate a little bit more on some of these best practices ?
A lot of time, effort and money has been spent to ensure that investors get access to a seamless, transparent marketplace to invest in. We also wanted to make sure we comply with all of RBI’s draft guidelines..
We have a sound credit policy which ensures that lenders get access to a screened, verified and graded pool of authentic borrowers with clear indication of risk.
We are India’s first P2P platform to have an Escrow account arrangement with IDBI Trusteeship. This ensures that lender funds cannot be touched by anyone including Monexo.
In another industry benchmark, we have partnered with credit bureaus like CIBIL and CRIF Highmark to report borrower repayments monthly. As a result, borrowers who miss EMI payments are immediately penalised.
5) Coming to the business model itself, borrowers could take a loan from a bank / NBFC as well – why should they come to Monexo to borrow?
Simply because we offer (i) risk based pricing and (ii) superior customer experience.
Risk based pricing enabled us to develop a proprietary, dynamic credit policy that helps us cater to a larger pool of borrowers while offering competitive interest rates.
Cost structures of banks prevent them from delivering a seamless, digital experience for the borrower. Excessive paperwork, physical visits and lengthy turnaround time for a loan are serious pain points for the borrower.
At Monexo, we have solved for this through a 100% digital process with a loan application TAT of <1 day.
6) There are several asset classes today for investors to consider – across debt and equity. Why
should they consider P2P investment ?
Every asset class has it’s own value in terms of the risk – reward equation. P2P lending makes a strong
case for itself as a short term, high yield debt investment with a large compounding component.
Secondly, because returns in P2P lending are not linked to the stock market or unknown growth drivers, it absorbs
volatility and provides much needed stability to the investor’s portfolio.
Thirdly, the asset class is unique as it falls into the sweet spot for investors who are looking for short term (2-3 year) investment products which add value to their portfolio.
8) How do you plan to market this asset class – P2P lending to investors ?
Investor feedback so far has been extremely positive.
However, a critical stakeholder in our expansion plan on the investing side is the independent financial advisor.
We believe Monexo offers a great avenue for the IFA to increase and diversify the product offering for clients. We are already working with 100+ IFAs across India who are really excited about this asset class.
There is a full fledged support framework for IFA assistance and obviously a robust remuneration model as well. We specifically want to empanel and work with IFAs who are aspirational and want to take their business to the next level.
By offering a new, attractive asset class to investors through P2P lending, Mukesh hopes to create a paradigm shift in India’s consumer finance ecosystem.
Monexo organises webinars to introduce IFAs to this new asset class. To register for the webinar on 4th July and learn more about Monexo’s partner program, please click