Xiaomi India strengthens its financial services play with a lending app

Currently, the service is present in 10 states which will soon be available pan India.

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The Chinese electronics product manufacturer Xiaomi, after becoming the leader in smartphones in India, is eyeing the soon-to-be USD 1 trillion lending market in the country. On Tuesday it unveiled a digital marketplace ‘Mi Credit’, after running a month-long pilot during which it disbursed over USD 3.9 million in loans.

As of now, the service is present in 1,500 pin codes across 10 states, and by the end of the current financial year, the company said, it will be available pan India. Mi Credit offers loan up to INR 100,000 (USD 1,400) and boasts of interests as low as 1.35% per month.

Playing it smart, Xiaomi’s new marketplace has partnered with not only non-banking finance companies (NBFCs) like Aditya Birla Finance Limited but has also roped in lending startups such as Zestmoney, Money View, and EarlySalary. This essentially means Xiaomi is collaborating with these new-age digital firms, which would otherwise have competed with the Beijing-headquartered company. In turn, these startups will get access to millions of Xiaomi’s users in the country.

The company has also tied up with CreditVidya which offers alternate data-based credit scores for underwriting loans. In a media statement Xiaomi said since Mi Credit is designed as a platform with multiple lending partners, it ensures a higher success rate. The company is still on the lookout for more such partners.

“…if there are good companies, we would be happy to evaluate [investing or collaborating with them] to launch new services,” Manu Jain, vice president, Xiaomi and managing director, Xiaomi India, told local media Economic Times.

This is in line with company’s ambition to diversify its business—still very much focused on smartphones and smart TVs among other devices—and make money off its internet services like Mi Music, Mi Video, and through advertisements.

In March, it had launched its payments app Mi Pay in India powered by UPI (Unified Payments Interface), a government-backed payment tool, which has already touched over 20 million registered users in the country. It has had ambitions of getting into lending as in 2017 it invested USD 8 million in a Bengaluru-based student lending platform KrazyBee.

“In India, the lending industry is on an explosive trajectory. As per a recent report from CIBIL, there are over INR 4 lakh crores (USD 55. 8 billion) worth of personal loans outstanding from nearly 19 million customers, with each user accounting to an almost INR 200,000 (USD 2,790) of the outstanding amount,” Jain said in a statement.  “Of these 19 million customers, the majority tend to avail it for medical emergencies followed by shopping, wedding, travel, and education purposes. We are bringing Mi Credit to India hoping to provide yet another innovative and truly digital solution for their lending needs.”

The company seems to have been replicating its Chinese financial services playbook in India. In 2015, it had rolled out Mi Finance app in China, which was followed by Mi Pay in 2016.

“India is the biggest market after China for Mi Credit. We are currently focused on the Indian market. We want to make it more successful and scale it up in the next 12 months…we want to be a significant player in this space,” Hong Feng, co-founder, Xiaomi Corporation, said in an interview with ET.