Jupiter found quick success lending to individuals. It now has its eyes on SMEs

Jitendra Gupta, founder of neobanking startup Jupiter, is looking to cover all aspects of the financial services space--banking, lending, cards, insurance, and payments. (Abhijit Bhatlekar/Mint)
Jitendra Gupta, founder of neobanking startup Jupiter, is looking to cover all aspects of the financial services space--banking, lending, cards, insurance, and payments. (Abhijit Bhatlekar/Mint)


  • Jupiter registered tremendous growth in its lending business that it began just a year ago, targeting young individuals. It now wants to replicate that success in the SME space.
  • The neobank also plans a prepaid cards business this year and is awaiting a licence to launch insurance broking services.

BENGALURU : Jupiter needed about four years to secure regulatory approvals to begin lending, but just a year for credit to account for about 40% of its business. Buoyed by that success, the neobanking startup wants to test the temperature in another high-opportunity territory: lending to small and medium enterprises.

Founded in 2019, Jupiter is an online-only platform offering banking services such as savings accounts, money transfers, and cash withdrawals, allowing users to monitor their transactions through a dashboard.

In July last year, Jupiter secured a non-banking finance company licence from the Reserve Bank of India and, more recently, a mobile wallet licence. The NBFC licence allowed it to lend. The company achieved considerable success targeting mostly young, urban individuals for its credit business, which it now wants to replicate in the SME space.

“We will first experiment to see how the return profile of those (SME) loans pan out, how is the performance, and basis that we will evaluate whether we need to scale or not," said Jitendra Gupta, founder and chief executive of Jupiter, adding that the company’s looking to scale up lending to account for 50% of its business in about a year.

“We do close to 100 crore worth of loan disbursement on a monthly basis, and we do it only to our existing users. We are seeing around 10-12% growth every month, and the default rates are under 2.25%. So we are able to see a very healthy portfolio and it will continue to scale," said Gupta, who had previously founded fintech startup Citrus Payments Solutions, which PayU acquired in 2016.

Lending to small and medium enterprises presents a huge opportunity. 

India is home to about 63.3 million micro, small and medium enterprises, of which about 99.4% are micro businesses, according to Mehekka Oberoi, director, IIFL Open Fintech Pvt. Ltd, a joint venture between NBFC IIFL Ltd and neobanking platform Open Financial Technologies Pvt. Ltd.

But only 14% of such businesses have access to credit, as against more than 30% in developed nations. “Currently, total demand for credit by MSMEs in India is 45 trillion, of which only 15 trillion is met," Oberoi said.

Also read | Credit to MSMEs gathers pace, but needs a tech push

Lending to SMEs, however, comes with its share of challenges such as inadequate availability of financial data and a lack of proof of business, she added.

In the face of headwinds

The overall digital lending space is also seeing increasing challenges. “I am seeing the data across companies and there is an elevated risk of 100-150 basis point credit cost increasing," said Gupta. A basis point is one-hundredth of a percentage point.

In November, the Reserve Bank of India raised the risk weights for unsecured consumer credits, including personal loans and credit card dues, signalling concerns over aggressive lending. 

An increase in risk weights results in higher capital requirements for the lender, which discourages lending and could push up interest rates. That apart, banks will have to assign higher risk weights for their loans to non-banking financial companies such as Jupiter.

“Credit cost increase has come in the consumer neobanking space essentially because of the personal loan segment seeing higher stress and higher provisioning requirements. In the personal loan space, the delinquency has gone up significantly," said Oberoi.

Also read | Can the RBI slow India’s retail lending binge?

Gupta, however, said Jupiter was able to escape the cycle as it had just started lending last year. “When the risk started increasing, we could see that firsthand because we were doing more short-term, so the repayments were coming faster and we could see if there was any change we needed to do," he said.

But he admitted there was a supply crunch in capital and banks are not offering new credit lines to NBFCs, creating a dual problem.

For Jupiter, the solution lies in co-lending. 

“We were able to raise money from three banks—ICICI Bank, IDFC First Bank, and Federal Bank—on the debt line last year. It helped us maintain the cost of capital and the supply of capital. But that being said, as an alternate strategy, co-lending is what we have been focusing on," Gupta said.

“Partnerships and collaborations are more crucial than ever before. By collaborating with fintech companies, payment processors, and even traditional banks, neobanks are expanding their service portfolios," said Kunal Varma, chief executive and co-founder at Freo, a neobank. “This collaborative ecosystem has allowed neobanks to innovate rapidly and stay competitive."

Jupiter is also looking at more co-lending partnerships. “One of the partnerships which we have today is with a Japanese NBFC. We will also explore other partnerships as our team is in touch with a few other lenders," Gupta said, without providing more details.

According to a report by research platform Statista, transaction value in India’s neobanking space is expected to grow at a compound annual growth rate of 14.61% between 2024 and 2028, resulting in a projected total amount of $19 billion in four years. 

FY24: A leap year

Valued at $650 million, Jupiter has raised a total $165 million in funding, and counts Matrix Partners India, Alteria Capital and Peak XV Partners among its investors. 

It’s among over a dozen neobanks that have emerged in the last few years looking to disrupt the banking, financial services and insurance (BFSI) sector, such as Open, NiYO, FamPay, Fi Money, and RazorPayX.

But Jupiter, like some other neobanks, has been struggling with mounting losses. Its loss spiked from 156 crore in 2021-22 to 327 crore in 2022-23, although its revenue increased from 42 lakh to 7 crore.

Also read | Should we worry about the rise and rise of retail lending?

The company hasn’t officially reported its financials for 2023-24 yet, but Gupta said it was one of Jupiter’s best years in terms of financial performance. 

“While the revenue has jumped to about 80 crore, the losses have come down to about 200 crore. We see the revenue tripling in FY25," he said.

“The growth momentum is coming on all counts—be it our banking business, lending business, cards vertical, and now Sebi allowing the revenue per transaction on the EOPs on the investment side, which will also add to our revenues this year as we do more than one million SIPs a month," Gupta said. “Overall we are seeing a very healthy growth in revenues and the margin profile."

The Securities and Exchange Board of India recently issued guidelines for so-called execution-only platforms, defining these as online platforms that facilitate transactions such as subscription and redemption for mutual fund schemes. Earlier, there were some restrictions on certain transactions. 

Systematic investment plans allow for regular and automated investments from bank accounts into mutual fund schemes at specified intervals.

Gupta said Jupiter is also focused on controlling cost decisions around hiring and technology and revenue expansion, which has helped it contain losses. 

The goal is to shrink the time needed to recover customer acquisition costs, he said. “Last year, our visibility was that we would be able to recover our CAC in 22 months. This year, we will be able to recover our CAC in 14 months."

Jupiter’s also awaiting a licence to start its insurance broking business.

“If you look at the financial services space, it’s a combination of banking, lending, cards, insurance, payments. Prepaid side we are starting this year, and the Insurance business will start next year," Gupta said. “Then we would have covered the space and our job would be just to increase the depth."

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