Touted as India’s first impartial online marketplace connecting banks and fraudsters, Scambazaar has established itself as the leading aggregator in the bad loans space.
The market for bad loans is booming with bankers falling over one another to make loans that will eventually default. But there is still a lot of room for growth with even the best in class banks reporting NPAs (non performing assets) of barely 15% – 20%. This implies that a majority of loans are still getting repaid – something bankers are not very happy about. On the other hand, fraudsters are finding it challenging to find the right banks to cheat and are still dependent on old-fashioned methods of bribery and forgery to get loans that they can default on. It is clearly a very inefficient model.
Fintech startup Scambazaar.com is effectively using technology to bridge this gap. Using its intuitive platform, borrowers and lenders can access all the necessary data to make an informed bad decision.
Defaulters don’t care about the interest rate, loan tenure etc. and Scambazaar’s algorithms only analyze relevant criteria – the complexity of application, risk of legal action, ease of counterfeiting documents etc. In a single screen, deadbeats can compare offers from all participating banks and apply for loans with a click of a button.
On Scambazaar, banks can find rogues with experience across the loan default spectrum, from minor credit card non-payment or two-wheeler repossessions to multi-million dollar scams. Proprietary models filter out unworthy aspirants with high credit scores or the possibility of a conscience so that bankers can focus only on authentic swindlers. The convenient interface provides all important applicant information, from passport details to aliases. Making a bad loan, especially in such a competitive market, has never been easier.
While currently dominated by industrialists and jewellers, Scambazaar plans to expand its user base. As a local trader questions, “All Indians are not experts in shell companies and hawala transactions, but why should they be excluded from the mainstream economy? I had an unimpressive track record of small-time tax evasion. But I uploaded my details along with a politician’s reference and within hours, was approved for a business loan that I have no intention of repaying. All thanks to Scambazaar!”
Banks are thrilled with the huge increase in NPAs they are witnessing using Scambazaar’s proprietary credit models. Another key benefit is the ease of accounting; bad loans typically go through a complex process where they are reclassified as non-performing assets, placed in various collection buckets, and eventually written off. But to enhance business friendliness, a regulatory exemption has been granted to treat all loans made on aggregators like Scambazaar as expenses. As the MD of a leading PSU bank delightfully noted, “It’s wonderful that we can write off the entire loan amount immediately upon disbursal; it has done away with all that sham accounting and hypocrisy. Now we just make the loan and write off the loan. It’s that simple!”
Venture capitalists are understandably rushing to invest in Scambazaar but the start-up has resisted, preferring instead to raise debt capital through loans on its own platform. It is backed by a solid group of creditors including India’s leading public and private sector banks and chit funds. Scambazaar credits its success to the market opportunity and timing. As its CEO explains, “There is unprecedented enthusiasm amongst bankers to make bad loans and a long-standing progressive environment for people to defraud. Scambazaar is simply proud to play its part in this journey of nation-bilking.”
Scambazaar is part of the Damned Group (www.damned.com) which is still kind of figuring out what it does.