Atul Monga, Kalyan Josyula, and Pranav Khattar Revolutionizing Affordable Home Loans with BASIC Home Loan

Access to affordable housing is a fundamental need for individuals and a critical factor in determining societal aspirations. However, despite numerous innovations in housing solutions for middle and low-income groups over the past decade, significant gaps still exist. Recognizing these gaps, Atul Monga, Kalyan Josyula, and Pranav Khattar co-founded BASIC Home Loan in 2020. Their mission: to streamline and digitize the home loan application process, making it faster and stress-free for all.

BASIC Home Loan is on a mission to enhance the penetration of affordable home loans, particularly in the Lower Income Group (LIG) and Middle Income Group (MIG) segments, with a special focus on Tier II and III cities. Their approach involves harnessing technology to create better products and credit solutions. Atul Monga, one of the co-founders, explains, “We want to ensure access and reach for affordable home loans penetration in underserved LIG and MIG segments, especially in Tier II and III cities. This involves building better technologies for product development and credit that is built to scale.”

The Founding Team’s Background:

Before launching BASIC Home Loan, the co-founders brought a wealth of experience from various sectors:

• Atul Monga: An IIT Delhi graduate with a background in fintech, Atul set up and led businesses for digital lenders. He recognized the immense potential of the affordable housing market and decided to address its unique challenges using technology.
• Kalyan Josyula: With an MBA from IBS Hyderabad and experience at companies like Credit Suisse, Rocket Internet, and Ola, Kalyan brought a strong finance and investment banking background to the team.
• Pranav Khattar: Pranav’s experience includes stints at PolicyBazaar, HDFC Life, and Lifestyle International. His education at the Goa Institute of Management and extensive industry knowledge added valuable insights to the venture.

Challenges in the Affordable Housing Market:

The affordable housing market in India holds significant potential, but it remains underserved and overlooked by many financial institutions. Banks typically focus on large-ticket loans in metropolitan areas, which leaves Tier II and III cities with unmet demand. This geographical imbalance is evident in the fact that 60 percent of loans in India are disbursed in Delhi-NCR and Maharashtra.

How BASIC Home Loan Works:

BASIC Home Loan operates with a unique “Phygital” approach, combining physical and digital elements to create a seamless home loan experience. Here’s how it works:

• Customer Journey: Customers visit the BASIC Home Loan website and select their desired loan type. The platform offers assistance throughout the loan application process, all at zero cost to the customer.
• Loan Size: BASIC Home Loan focuses on affordable housing loans, aligning with government initiatives like PMAY (Pradhan Mantri Awas Yojana) and “Housing for All.” Loan sizes range from Rs 5 lakh to Rs 20 lakh.
• Agent Network: The startup utilizes a network of agents who play a pivotal role in guiding customers from the research phase to the final disbursement of the home loan. These agents receive a commission for each successful disbursement.
• End-to-End Fulfillment: BASIC Home Loan ensures complete transparency in the loan process, from documentation to disbursement, all from the convenience of the customer’s home.

Competition and Challenges:

While BASIC Home Loan faces competition from other companies offering affordable housing loans, its tech-centric approach allows it to collaborate with multiple partners in the banking and lending sectors. The startup earns a percentage of revenue from every closed loan, making it a viable business model. One of the primary challenges the founders have encountered is convincing traditional banks and Housing Finance Companies (HFCs) to embrace technology. Many of these entities continue to rely on legacy processes, making it difficult to introduce digital solutions. Regulatory constraints and the absence of a centralized property ownership database in India have also contributed to the mortgage industry’s offline nature.

Future Plans and Growth:

Looking ahead, BASIC Home Loan aims to establish its own credit platform through risk-sharing agreements with partner banks. By the end of FY 2022, the founders intend to expand their credit platform to at least 20 cities. The start-up has already made significant progress, receiving loan applications worth Rs 200 crore and securing sanctions for Rs 90 crore within its first five months of operation. For FY 2021, the founders anticipate generating revenue of Rs 2 crore, with plans to reach Rs 15-20 crore in revenue for FY 2022.

Moreover, BASIC Home Loan raised $500,000 in seed funding from Picus Capital, a German-based early-stage technology investment firm, in October 2020. In a nation where the demand for affordable housing is expected to rise to 38 million units by 2030, BASIC Home Loan is poised to play a crucial role in addressing this need. Its innovative approach, seamless integration of technology, and commitment to enhancing the home loan experience position it as a game-changer in the affordable housing market.