Goldman Sachs and others put in the money in an extended Series B round.

Zestmoney, based in Bangalore, India, offers loans to customers who have no credit card, limited credit history, and often very little data that can be assessed. With its latest extended Series B round of $15 million, the fintech startup has raised a total of $63 million to date.

Other contributors to the Goldman Sachs-led round were existing investors Naspers Fintech, Quona Capital, and Omidyar Network.

ZestMoney on a growth path

The startup was founded in 2015 by Lizzie Chapman  (its CEO), Priya Sharma (CFO/COO), and Ashish Anantharaman (CTO).

It focuses on India’s underbanked population, millions of whom do not yet have a credit card and, therefore, any credit history. Only three people out of 100 have a credit card. Also, banks are unwilling to risk lending to persons without a credit standing. Furthermore, banks find small-ticket loans unviable.

Using AI, other data points, and the borrower’s record with ZestMoney, the fintech helps the customer build a credit profile. After tying up with 3,000 merchants and payment processors, ZestMoney is currently able to offer credit ranging from $140 to $3,000 for purchases such as mobile phones and other consumer goods. Merchants include Flipkart, Amazon  and Paytm. Payment processors include names such as Razorpay, BillDesk, Cashfree, CCAvenue and PayU.

ZestMoney has a user base of 6 million. Apart from VC funding, it has also raised loan funding to deploy in customer financing, though details are not available. However, it recently tied up a funding facility of $100 million from Credit Saison, a Japanese financial services company affiliated to Mizuho Financial Group.

The fintech has an ambitious target to disburse $1 billion in the coming 18 months. It also aims to secure a user base of 300 million users in the future.

However, fintech lending in the US is running into problems

Recent reports out of the US suggest, however, that fintechs have suffered losses on platform lending to sub-prime customers or those without a credit history. As a result, they have had to tighten lending norms to these customers.

Ironically, therefore, these fintechs are now looking more and more like the very banks they set out to disrupt.

Related Story: FinTech: As Investors Revolt, Fintech Lenders Get Picky on Borrower Quality