Kunal Shah’s CRED, alongside Newtap Technologies, is leading an INR 550 crore investment in Newtap Finance (NFPL), its NBFC arm. This move aims to expand CRED’s lending capabilities and strengthen its position in the financial services market.
Cred and Newtap Investment Background
Founded in 2018, CRED began as a platform rewarding credit card bill payments. It has since evolved, offering loans, credit lines, UPI transactions, insurance, and personal finance solutions.
Newtap Finance, formerly Parfait Finance, was acquired by Newtap Technologies in 2021 and rebranded as NFPL. CRED and Newtap gained control in 2022, with Kunal Shah indirectly holding 76% through Newtap, while CRED owns 23.6%. RBI blocked CRED’s attempt to increase its stake in 2023, leading Newtap to operate as an independent NBFC.
Investment Objectives
This investment will increase NFPL’s capital base, enabling loan book expansion. NFPL primarily provides personal loans, with CRED acting as the loan service provider. The company has co-lending partnerships with a bank and another NBFC, boosting reach and financial stability.
The funds will enhance NFPL’s tech-driven lending model, improving efficiency and customer experience. CRED’s data-backed risk assessment aims to refine loan offerings and drive growth.
Financial Standing
As of December 2024, CRED managed INR 19,000 crore in assets, with an NPA ratio of 1.1%—well below the 2.9% industry average. NFPL had an AUM of INR 1,141.6 crore, with INR 632 crore on its books. Salaried borrowers constituted 60% of its portfolio, while self-employed individuals with strong credit histories made up the rest.
CRED’s revenue grew 66% year-over-year to INR 2,473 crore in FY 2024. Operating losses declined by 41%. Meanwhile, Newtap Finance reported a loss before tax of INR 5.35 crore between April and December 2024 due to higher loan write-offs and rising credit costs.
Lending Model and Market Implications
NFPL uses a tech-driven lending process, offering pre-approved loans based on users’ financial behaviour. The average loan size is INR 1 lakh, with a maximum tenure of 60 months and an 18% average interest rate.
The company is strengthening its co-lending partnerships, allowing CRED to extend its lending services while mitigating risk. NFPL also maintains INR 113 crore in unencumbered cash, ensuring short-term liquidity.
Challenges in Fintech Lending
RBI’s stricter regulations on consumer credit have made unsecured loans more expensive, prompting fintech firms like Paytm to scale back lending. Despite this, CRED continues its focus on affluent borrowers, maintaining a low NPA ratio.
CRED is also diversifying its offerings. Recent initiatives include CRED Garage for vehicle management, Escapes for travel services, and a beta version of its CRED e-Rupee CBDC wallet in collaboration with the RBI.
Future Prospects
Cred and Newtap Technologies’ investment in Newtap Finance is focused on growth, co-lending, risk assessment, and technology-driven lending. For CRED, the move aligns with its goal of building a full-service financial ecosystem. As fintech evolves, technology will shape the future of lending. With this investment, CRED and Newtap Finance are poised to lead the digital lending transformation in India.
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