How CredAvenue (Yubi) is powering the debt market by leveraging technology

The debt markets in India are divided into three categories: the Government Securities Market, which is the oldest and most dominant; the PSU Bonds Market, which has been developing since the late 1980s; and the Corporate Securities Market, which has grown rapidly since liberalization, particularly in the last two years according to the report by RBI. 

The Government Securities Market has been the primary emphasis in the development of debt markets for three reasons. For starters, it is the most important part of our debt market. Second, as a market for sovereign paper, it contributes to the establishment of benchmarks in the financial markets as a whole. Third, it is crucial in establishing an efficient and dependable transmission channel for the deployment of indirect monetary control tools.

In our country we have startups for every other thing but never did we have something that catered to the unorganized bond sector. CredAvenue is one such startup that is creating disruption in the Indian Bond Market.

CredAvenue is one such platform that enables companies big or small to access the debt market to seek capital and receive loans, as well as banks and NBFCs to lend and track loans. Investors see this offering as one-of-a-kind and ideal for a debt-strapped country like India.

In 2020, India’s credit-to-GDP ratio was expected to be about 56 percent. However, according to data from the Bank of International Settlements (BIS), that figure is less than half of the G20 average. With a significantly lower ratio than its counterparts, India still needs to work a lot and traverse a long path in terms of boosting loan availability.

Overview:

CredAvenue (now Yubi) is a debt marketplace for companies. CredAvenue was created as a piece of the financial infrastructure that serves as a one-stop destination for all debt market players in India as well as the first point of contact for overseas investors.

It provides a comprehensive solution for investors to discover, assess, and execute transactions in real-time. Furthermore, it has smooth online execution of all debt instrument transactions and sends real-time notifications on different transaction stages that are actionable.

CredAvenue was created on the belief that debt markets offered a substantial possibility for scale expansion through the use of technology, comparable to the opportunity that Indian equity markets presented over 25 years ago.

The corporation has reached a critical milestone by enabling debt agreements of Rs 55,000 crore. The platform also provides debt market participants with a complete collection of products and solutions that facilitate transactions in this segment across a wide range of products and solutions.

CredAvenue’s platform fundamentally functions as an infrastructure for businesses and lenders to locate and execute debt transactions. Gaurav Kumar founded the firm in 2017, even though it has over 1,500 corporates and 750 lenders on its platforms. Since its inception, it has also executed debt transactions of over Rs 65,000 crore.

The platform now includes five offerings. The first is a co-lending platform that allows banks and non-banking financial institutions to find and offer joint loans. Second, businesses looking for loans can do so using the platform, which also helps manage repayments. The third, and most optimistically anticipated, is a bond marketplace to assist firms and lenders in accessing main and secondary bonds.

Its fourth platform aids in the securement of working profits and cash flow demands for supply-chain finance. Finally, it also offers structured finance alternatives such as pass-through certificates and securitizations to companies.

CredAvenue leverages technology to make the whole journey of acquiring debt hassle free. In India Debt capital markets have always been highly concentrated. 3% of the rated universe has access to nearly 90% of the total loan market. As a result, unless such infrastructure is constructed, the market will lack trust in accessing lower-graded bonds, such as those rated below AAA and AA.

In comparison to wealthy countries, India’s debt markets are still in their infancy. In India, for example, less than 10% of loans are securitized, compared to more than 30% in the United States.

The absence of underlying infrastructure, lack of transparency, and poor price discovery are the reasons it has not taken off in India. There’s also the fact that a lot of learning is still done one-on-one.

The problem is exacerbated when you look beyond the top-rated corporations; access to debt markets for such organizations is far more difficult than for their counterparts in developed and other emerging economies.

This is the problem that the founders observed and wanted to solve thus making it more smooth and more accessible. 

CredAvenue now facilitates roughly 10,000 loans per day; Srinivasan believes this can be quadrupled in six months and the business can achieve a run rate of one lakh loans per day in three years.

How Yubi is solving the hindrances in the Indian debt market:

The problem was that there was not a single marketplace for loans present earlier in India. In general, loan appraisal entails a lengthy paperwork process that varies by bank. There is no centralized marketplace where a customer can safely share these documents and receive various loan proposals. Clients must deal with each bank individually, which is inconvenient.

This is one of the reasons why clients only speak with a few banks to finalize a loan. As a result, they are unable to obtain the finest deals. If there was a standardized process and a common marketplace where consumers could place loans, they would be able to receive loan offers from a big number of banks/financial institutions and acquire the best price with minimal effort.

When we apply the same scenario to business borrowings, it becomes much more complicated because judging an individual’s credit is significantly easier.

It is simple with CredAvenue since clients may portray borrowers’ profiles and businesses in a consistent manner on the platform. CredAvenue also connects it with a vast and diverse group of investors/lenders. Not all lenders or debt investors are the same. They all have preferences, rules, and certain criteria, among other things. The platform uses advanced analytics and a unique methodology to determine the best order match, guaranteeing that there is a risk-reward and requirement fit for both parties.

Now if we see the lender’s part of the story, they are always in search of the right people to lend. When we apply the same scenario to business borrowings, it becomes much more complicated because judging an individual’s credit is significantly easier.

It is simple with CredAvenue since clients may portray borrowers’ profiles and businesses in a consistent manner on the platform. CredAvenue also connects it with a vast and diverse group of investors/lenders. Not all lenders or debt investors are the same. They all have preferences, rules, and certain criteria, among other things. The platform uses advanced analytics and a unique methodology to determine the best order match, guaranteeing that there is a risk-reward and requirement fit for both parties.

CredAvenue also assists investors in monitoring the performance of their portfolio, repayments, and collections on the site after disbursement. This is supported once again by the platform’s robust data engineering and data science capabilities. Investors are also provided with a full collection of reports and notifications.

Bottom line:

With the groundbreaking idea of starting a debt regulating platform making the process of borrowing and lending easier and seamless for companies. CredAvenue is bound to create disruption in the Indian business sphere as the vision and mission of the startup is one of a kind, that is set to solve a major issue for companies.

The startup has always been at the edge of product innovation and will continue to increase our portfolio.

CredAvenue’s goal is to expand the debt market and develop it in terms of supply and demand. It will be accomplished by merging with more banks and lenders, as well as making it easy for clients to integrate with the platform.

On the borrower side, the team encountered difficulties with data sharing. As a result, the business intends to invest heavily in order to obtain part of the data from public sources as well as directly from customer systems.

CredAvenue also intends to add a slew of new interaction modules for borrowers and investors, so that it may serve as a one-stop log-in site for them on a daily basis.

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