You need a Rs 40-lakh home loan. Which bank offers the best interest rates? How do you normalise them for floating vs. fixed rates, daily reducing balance or monthly reducing balance, and prepayment, service and other charges?
Every borrower has these questions, and it can take weeks to get the answers. In 2007, Arjun Shetty, who then handled online retailer Amazon.com's credit product programme in the US, had the same trouble getting the answers when he decided to invest in a house in India. "If, as a financial professional, I faced so many problems, what happens to a layman," he wondered.
So why not create a platform to provide unbiased, transparent loan information and facilitate loans? Back in the US, he discussed the idea with his wife Rati and brother Adhil Shetty. After due-diligence and two visits to India, they decided to start Bankbazaar.com. It "offers real time loan quotes by linking online to various banks and thus enables a loan seeker to know the lowest rate," says Adhil, who is the CEO. What sets aside BankBazaar from other financial services sites is its level of detail and the backend.
"Existing websites... merely sold customer information to banks. We decided to offer comparative rates, information on fees, taxes, eligibility and documentation," adds Arjun, 29, the Chief Operating Officer.
Bankbazaar does not charge its customers anything but collects a fee from banks, for which getting customer via the portal is 70 per cent cheaper than the usual route.
But its early days coincided with the economic slowdown and tighter lending by banks. "Starting up at a tough time is good as you tend to be frugal in your business processes," says Rati Rajkumar, who handles product development.
Today, BankBazaar facilitates loan disbursement of Rs 100 crore a month with just 30 employees, most of them banking specialists who had worked at Amazon.com and Microsoft. It is expected to post revenue of Rs 6 crore in 2010-11 and has become operationally profitable since March 2010.
"We want to deepen our existing operations and also facilitate life insurance policies. That is one area, like loans, which needs some transparency," says Arjun.
FOCUS: Financial services
FUNDING: Seed capital by founders (Rs 50 lakh), First round funding: AVT Infotech (Rs 4 crore)
COMPETITION: Banks, other on-line sites such as www.apnaloan.com
REVENUE: Rs 6-crore target for 2010-11
BREAK EVEN: Operational profits since March 2010
BEST ADVICE: A strong business case alone is not enough to succeed in India. You need a strong relationship