Cred's Cash+ highlights shift in India's lending landscape

On Tuesday, February 25, at an intimate event held at a posh eatery in central Bengaluru, fintech unicorn Cred made four announcements. The first two were largely cosmetic—an improvement to its credit score tracker and a revamped dashboard for credit card management—and the last concerned the launch of a non-profit, Cred Foundation, aimed at spreading financial literacy.

Sandwiched between them, though, was an actual new product launch—Cred Cash+. The new offering from the Bengaluru-based fintech allows users to avail a line of credit against their mutual fund (MF) holdings at interest rates of between 9-12%—considerably lower than the rates charged on unsecured loans.

Unlike the other announcements, Cred Cash+ was the only thing unveiled at the event that will have a material impact on the company’s top and bottom lines. This is crucial for the fintech, which is still loss-making despite managing to grow its revenue significantly in the year ended March 2024 (FY24). Though Cred has yet to file its audited results for the period, it announced last September that its revenue had grown 66%, year-on-year, to Rs 2,473 crore. While its operating losses fell around 40% to Rs 609 crore, from about Rs 1,024 crore during this period, its net loss actually climbed 22% to Rs 1,644 crore.

Speaking at the event, Cred founder and CEO Kunal Shah said that the platform had observed that a popular behaviour among members was to break fixed deposits or mutual funds to meet expenses such as weddings. With Cred Cash+, he explained, users could now avail liquidity from the platform’s lending partners while not liquidating their MFs. All without any paperwork involved. Cred, for its part, earns a commission for facilitating these loans, adding a new revenue stream to the many—from unsecured lending to insurance and payments—that it already boasts, while potentially also getting a taste of the interest charged on the loans as well.