Credit card payments company CRED launches peer-to-peer lending option for its 7.5 million users

• This feature will allow users of the CRED app to lend money to each other at an interest rate of up to 9% annually.
• CEO Kunal Shah believes that this will be a low-risk investment, as it only allows select users with good credit scores on CRED.
• CRED had also launched its loan offering last year and has a loan book of ₹2,000 crore to date.

Kunal Shah-led credit card payments app CRED will now enable a peer-to-peer (P2P) lending feature called CRED Mint for its 7.5 million members. This will allow users of the CRED app to lend money to each other at an interest rate of up to 9% annually.

The feature has been launched in partnership with P2P non-bank LiquiLoans and will allow users to “invest” anywhere between ₹1 lakh to ₹10 lakh of their savings in a capital pool. This pool will then be used to lend to other CRED users, who are seeking a personal loan.

These loans will be disbursed at a 12-13% interest rate annually. Of which upto 9% interest rate will be rewarded to those investing in the product.

Shah, in an interview with The Economic Times, said that they realised that many of their users have lakhs in savings lying in their bank accounts and accruing interest rates, which don’t even beat inflation.

The P2P lending model is not a new one in India. Other non-banks like LiquiLoans, LenDenClub and Rupee Circle are also operating in this category. However, one needs to realise that the returns on these investments are dependent solely on the repayments of the loans. The non-banks usually take the risk on their books and pay the lenders out of their own pockets in case of defaulters.

Given that CRED only allows select users on this platform, Shah emphasised that a P2P sort of lending can offer a low-risk investment opportunity for its users. Notably, CRED only allows users with a credit score of 750 or higher on its platform.

Founded in 2018, CRED started off as a credit card bill payments app. Over the years, it has entered e-commerce, lending, payments and now investment segments.

Shah claims that about 25-30% of all credit card bill payments in India happen through its platform. Meanwhile, CRED launched its lending business in 2020 and its loan book is now at over ₹2,000 crore with non-performing assets at under 1%.

CRED entered a unicorn club in April 2021, after raising $215 million in a round led by Falcon Edge Capital and existing investor Coatue Management. The company is now valued at $2.2 billion. A unicorn is a private firm valued at or more than $1 billion.

Overall, the company has raised about $471 million to date from marquee investors like Dragoneer Investment Group, Tiger Global Management, Sofina, DST Global and more.

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