After a year of testing, Xiaomi has formally entered the micro-loans space in India with its Mi Credit app, a curated platform offering access to Non-Banking Financial Companies (NBFC). Xiaomi had earlier launched Mi Pay based on the UPI-platform.
In India, micro-loans of up to Rs 1,00,000 can only be given by NBFCs with a license. However, Xiaomi India head and managing director Manu Kumar Jain did not seem averse to the company offering loans itself. “If required, why not?” he said when quizzed on the same. Getting an NBFC license, Jain said, would not mean Xiaomi would stop working with its existing partners. “Having our own NBFC license would allow us to serve customers better, maybe those who are not being served by other partners. It just gives us a lot more leverage,” he explained, adding that in China their model has both.
Jain said they were working with FinTech companies for now and was open to adding even banks on the platform. Banks can help Xiaomi offer higher loan amounts. Even without banks, Xiaomi claims to have given out loans worth Rs 28 crore in the month of November alone during the pilot run.
Hong Feng, CEO of Xiaomi’s financial services business in China and co-founder of the company, explained said the scale of partnerships is “very large” in China where they have over 20 million active users. “We have our own book, but we are also working with partners. So we are running a very flexible polished model where the optimisation is done to ensure that our users are being served in the best manner we can,” Hong said.
In China, Xiaomi’s financial services’ lending business stood at $8 billion for the loan book with $2 billion in outstanding balances in mid-2018, according to Reuters.
In India, the Mi Credit for now is a curated platform with multiple partners such as Aditya Birla Finances Limited, MoneyView, EarlySalary, Zestmoney and CreditVidya. Xiaomi is an early investor in ZestMoney. With Mi Credit, Xiaomi is claiming a very simple user interface where users will be able to get a loan within five minutes from any of these providers. However, the final credit-worthiness is determined by the NBFC in question, each of which have different models to determine this.
Jain said all data with the lending partners would be shared in an encrypted format and stored in India. This is as per the Reserve Bank of India mandate. “We have strong data protection policy implemented with these partners so that they cannot misuse this data for anything else. The data will only be used for financial services,” insisted Jain, clarifying that partners can only use the data for risk modelling and not sell it.
There has been criticism that data from users is often used to retarget ads on MIUI, but Jain said they will not use this financial data to target ads or to push for loans on MIUI.
He also said users will have to give specific consent to the app. For instance, he said, the app will need to know location when filling up an address. “Now, you may be present in a different location and filling up address space somewhere else, which may not impact the low risk customer. But if you are a very high-risk customer, and you're sitting in Delhi, but filling a form for some other location, then the system may decide not to give you a loan,” he explained.