Beating SBI, 1% NPAs & India's Massive Loan Gap I Victor Senpaty Co-Founder Propelld

Who is funding the students that India's banks won't touch?

Propelld is one of India's largest education-focused lenders, giving loans to roughly 1.5 lakh students every year — matching SBI — with a team a fraction of the size and no branch network. In a single financial year it now disburses more education loans than SBI did in six years of its history.

Victor started Propelld in 2016 with a thesis born out of a Milton Friedman paper: a good student should never have to walk away from a good opportunity just because they don't have the money. Propelld hit its stride by going exactly where traditional lenders refuse to — 70% of its borrowers come from tier-3 cities, a segment banks treat as too risky.

Instead of chasing the safe 1% of students at IITs and IIMs, Victor made a bet most lenders never make. He built the ability to underwrite the end-use itself — a "Crystal score" for institutes and courses that measures employability and real ROI. The result: NPAs held at ~1%, roughly one-tenth of what banks see the moment they step outside tier-1.

Victor has a clear view of where lending goes next. In a post-LLM world, risk, distribution, and fulfillment get radically more efficient — one person already drives ₹50 crore of disbursal a year, and OPEX is projected to fall toward 2% at ₹6,000 crore AUM. His ranking never changes: NPAs first, unit economics second, growth third.

If you are excited about how AI is rebuilding lending — and who gets to dream bigger because of it — this episode is for you.

00:00 - Trailer
00:50 - The two numbers that tell Propelld's story
01:55 - Why 70% of borrowers come from tier-3 cities
02:21 - How NPAs stay at 1%
02:52 - Why education is a great asset class
04:04 - Building a "Crystal score" for institutes and courses
05:31 - End-use control: why an education loan isn't a personal loan
06:27 - Why banks only lend to IITs and IIMs
08:36 - Measuring employability to underwrite the end-use
10:23 - 10 years at the intersection of fintech and edtech
11:46 - Why education financing is only ~5% penetrated
17:53 - Do India's graduate really not get a job?
21:12 - The 8% data point, and quantifying ROI
22:24 - The social mobility no one can price
25:39 - From IIT Madras and a global bank to building Propelld
27:41 - How the post-LLM world rewires lending
30:26 - How fast an institute gets onboarded and a loan disbursed
32:12 - Profitable at a ₹1 lakh ticket size
34:13 - The financials: doubling revenue, holding costs flat to FY30
37:19 - Lending as an ecosystem enabler, not just a loan
39:33 - The most valuable courses in a post-LLM world
41:40 - The bet on arts graduates as coding gets commoditized
43:32 - The Milton Friedman paper that started it all
46:53 - 100 investors, and the few who said yes
48:33 - Co-founding with school friends since class 6
50:24 - Settling disagreements over food and Hampi trips
51:31 - The most common mistake fintech founders make
52:51 - The one metric that ranks above everything: NPAs
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Transcript

SPEAKER_01 0:00

We have now given more loans in a financial year than what SBI would have given in just six years of history.

SPEAKER_03 0:07

Education is something that helps you change your orbit. Why not banks are doing it?

SPEAKER_01 0:12

In FI25, SBI would have given out some 2.25 trillion rupees of loans for home loan, whereas for education it would be close to 0.15 trillion. So 50x difference.

SPEAKER_03 0:24

India is producing more graduates than ever, and very few get jobs. What's the data that you get to see through Propel that most of us don't have any idea about?

SPEAKER_01 0:34

I don't think that's really true though. In our experience.

SPEAKER_03 0:43

Hi Victor, welcome to the Nuance Show.

SPEAKER_01 0:46

Hi Nancy, uh, thanks for having me here.

SPEAKER_03 0:48

So, Victor, let's just start this conversation with a number that you think uh tells the story of Propelled better than anything.

SPEAKER_01 0:57

So, um, Nancy, I um my the I would talk about two numbers. Uh the first number is um we have now given more loans in a financial year than what SBI would have given in just six years of history. Uh SBI has been there around since uh ages now. It is the largest lender in uh education financing in terms of number of students. We give loans to about uh one and a half lakh students every year, which matches SBI. You can assume the scale that we have, and uh with a team which is you know, I don't know, one fiftieth of an SBI uh without a branches sort of model. Uh that's a number I'm really proud of. Um second number, which I would want to talk about, is uh 70% of these students that we give loans to come from a tier three city. Uh so tier three, which is traditionally seen as a risky segment by lending institutions, has been our fote though. Um, you know, and in fact, if I may add, uh you would want to add a third number in this too. Um, nothing more. It's just one more number, which is our NPAs are at a 1% level. Uh you if you compare it with traditional players, it's uh one tenth. It's seen a history of ups and downs through COVID, stress tested through you know a tech crisis, uh demonetization. So we are really proud of that.

SPEAKER_03 2:44

Uh and that too, uh when you're serving to tier three students.

SPEAKER_01 2:50

Yes, in fact, that's been a strength for us, is what I would say. Uh these what we've understood over time is uh, you know, education is a good asset class, it's a great asset class. These are parents and students who are invested in making their lives better. So logically, it makes sense that people should be repaying back, they should be getting some value. If you're able to make that assessment uh really well, uh, you should be really good. That's been our takeaway, too. Uh so somebody who does their job well in terms of underwriting these institutes or the courses, the end users and the students will have a very low NPA. It will behave like a secured product, uh, is what our understanding.

SPEAKER_03 3:43

But everything happens in the future. So, how do you know predict that uh this student will be able to pay?

SPEAKER_01 3:53

As uh, you know, as we've learned traditionally, like the past is a good reflection of the future. It's about doing that and just getting deeper in there. So um, what we do, you know, uh both philosophically and tactically uh in our underwriting and our thought process of risk is get deep into the institutes and really understand what is a quality of service that they provide and how is that going to look like in the future too? Is the student going to get a value out of this? The value need not be just a job, the value could be even something as simple as being able to complete his course and time. Uh, that's a very basic expectation that somebody has once they enroll their kids in a coaching institute as an example. Uh so you can imagine that we are building a Sybil score uh or a Chrysal score for institutes and for courses. Uh in fact, I would correct it. It's not for institutes and courses, it's for end use. Uh, and of course, institutes and courses are a part of it. It's for a particular end use.

SPEAKER_03 5:08

So lending to students through institutions or without institutions work uh with propelled, or like how do banks also operate in this space if you can simplify and sure.

SPEAKER_01 5:22

So the core idea here is um a couple of things. One is an end-use control. So, why is an education loan different from say a personal loan? A personal loan can be used for an end use which is value destroying. That's when mostly people have a uh difficulty in repaying back. Say somebody uses it for gambling and loses money or speculative trading. If you use it for an ROI generating use case, uh most people will repay back. You're not uh questioning the intent of the people. Intent changes with what happens really. Now, with uh education, the end use definitely is ROI accreditive. Uh, but how do you structure that product that so that it actually goes to the institute for an end use? That matters. Uh the other thing is let's say when uh uh banks typically look at end use, it's a more simplistic thought process of uh if these are top 100 institutes, the students will definitely get an end use. That is much more easier to say. Yeah, but how do you progress that thought into say the 100th to the 500th institute or say the thousandth institute?

SPEAKER_03 6:52

Like that's why most of the banks uh prefer giving loan to IITs, you know, even the loan limit is also higher for them.

SPEAKER_01 7:02

Yes, you're absolutely right. So when it comes to an IITs or IMs or ISBs of the world, Narsi Munji's, SP giants of the world, it's it's relying on the idea that whatever the loan amount is, students will get a job which uh justifies paying that EMI back. And 100% of the time these students will get placed. Uh these students are cream of the country, they will have a high moral uh you know value in repaying it back to. So it's a lot more easier decision to take. But once you start going down that funnel, and you know, if you look at the top 100 institutes, they only cater to hardly 1% of the students, though. What about the remaining 99%? Are they all going to places where they do not get any ROI at all? Uh I would say no. Uh, everybody has a certain ROI in mind. You're not if you go to an IIT, your benchmark is probably a 10 lakh, 12 lakh starting job. If you go to a lower-tier institute, say a second-tier engineering institute, your benchmark is getting a 5 lakh job. Now, in that benchmark and the costs are adjusted accordingly. Now, would you be able to give a loan there if you understand which of these institutes or which of these courses are doing their job well and whether those students are going to get the value that they have come in for? That's basically the question here. So uh what we have done really well is measure employability of students, uh, measure end uses from institutes and courses, and be able to underwrite the end use. We have seen that that has turned out really well in terms of both ability and intent of repaying back a loan. And our NPAs have stayed at a 1% level. Uh whereas if you compare it with banks, once they move out from IITs and go towards other institutes, tier two, tier three institutes, uh, their NPAs shoot up uh to close to around a 10% sort of level.

SPEAKER_03 9:17

And to improve that number, they you know focus on tier one colleges only, right?

SPEAKER_01 9:22

Correct. So it it works in uh two ways. Uh a lot of the loans go in tier one colleges where there are almost zero NPAs, yeah. And then a bunch of loans on tier two, tier three where they cannot deny because education is also a sensitive uh category, politically sensitive category. It's a priority sector lending category. They have to fill up their priority sector uh targets also. Uh their significant NPAs in those particular segments. For us, the market is in the tier two, tier three segments, which are good enough for us to lend to, highly underpenetrated right now, and sort of opportunities which a traditional you know banks would not be able to cater to. And you know, we get better over time in underwriting these uh institutes and courses.

SPEAKER_03 10:21

And Victor, you started Propel in 2016.

SPEAKER_01 10:24

Yeah.

SPEAKER_03 10:24

And this is 2026, so you'll be completing 10 years this year, right? Um so 10 years building at the intersection of fintech, ed tech, right?

SPEAKER_02 10:36

Yeah.

SPEAKER_03 10:37

What are the surprises that you had?

SPEAKER_01 10:42

Um let me think this.

SPEAKER_03 10:44

Because education India is obsessed about, right? It's it's education is one, you know, education is something that helps you change your orbit. Um like I have come from a village and uh um all my family members are into farming. Uh my mother fought with my father uh because she wanted to move to a you know tier three city so that me and my brother could get good education. So we I my father took up a job in tier three city and we moved as family cities. So education, we truly believe in education. We feel that if we don't have anything else and if we are good in studies, that can literally take us to places, right? Yes, but still the numbers are different, right? Like the if we just talk about the loans that uh the kind of loans are granted for home, for vehicle versus the number of loans that are granted for education, there's a huge gap.

SPEAKER_01 11:44

Yeah, so education is categorized as a PSL, uh priority sector lending, and uh there are targets for that, but overall I agree with you. Say, for example, uh housing category or a vehicle loan category, uh, 50% uh would be 50% penetrated in terms as in 50% of the spends would be financed with loans. Uh, so it's highly commoditized. Now, education is the penetration for education spends would be close to 5%, as in 5% of uh loans in overall education as spends, which is close to around $100 billion. A lot of people are changing that. Uh, you know, some of our peers, like Anavance and Credilla, have done some wonderful work in uh, you know, study abroad segment, where it's the same story, but you know, students going abroad, uh, they've done that and they've proven that particular market too, that they've proven that thesis which you sort of spoke about.

SPEAKER_02 12:50

Yeah.

SPEAKER_01 12:51

And that has actually been our very strong core learning, too, that uh if you're able to find the right institutes, right courses, and right students, and they're doing things which are really productive, then your money is going to come back. It's it's a great business to do. Uh that has been our core learning, uh, which of course has taken a lot of you know uh misses, a lot of trial and error, a lot of burning our hands. Uh, but that's been a philosophy that we began with. And fortunately for us, that philosophy has stuck through. In general, we have seen that philosophy work around. If the institutes are the right fit, they're doing their job really well, the courses are the right fit, they're not overselling those courses or over-promising outcomes. The students are focused, the students aren't parents, the family is focused and they really want to do this, and they're making the right choices in terms of education, they will get their value. And you, as somebody who's facilitated that entire process, uh will have good fundamentals as a lending company too. Great fundamentals as a lending company.

SPEAKER_03 14:14

So, why not banks are doing it?

SPEAKER_01 14:20

I think it's just a question of focus, and uh, you know, we exist as propelled for the last 10 years to solve a hard problem, and we are, you know, scratching the surface of it with you know, a post-LLM world makes it feel like we are so much empowered now. But the learnings that we have had over the last few years are not transferable. Uh, you know, these are ingrained, deep philosophical sort of uh learnings and a lot more tactical learnings as well. For a bank, it doesn't matter, right? As in the retail book itself for lending is a fraction of the wholesale book. Uh within the retail book, something which has been going on, and you know, secured products are a lot more better, it's been going on. So, as an example, in FI25, SBI would have given out some 2.25 trillion rupees of loans for home loan, whereas for education it would be close to 0.15 trillion. So 50x difference. So who in there would want to really focus on this and really crack this and really sort of do this? Uh, that's a question.

SPEAKER_03 15:40

And this is SBI, we didn't even talk about the other banks.

SPEAKER_01 15:44

Yeah, so you know, education loan is primarily, you know, so there are primarily in terms of PSU banks, there is SBI, uh, which does say one and a half lakh students every year, gives loans to one and a half lakh students every year. There's uh Bank of Baroda and Canada Bank, which do close to 50,000 loans. And everybody else then comes later, probably your PNB and few other players, you know, Bank of Maharashtra and so on, but hardly five, six banks. And SBI is 50% of that wallet share. You take Bank of Baroda, Canada Bank, PNB, you know, so five banks would cater to 90% of that. Then you have uh NBFCs, there's Credila and Avance, which do abroad, and they've done a great job in abroad from the place that study abroad uh education used to be financed. That was at a similar space, say, you know, 15 years back. But you know, look at that market now. It's probably 15-20% penetrated. So 15-20% of study abroad financing, uh, study abroad spends happens through financing, uh, which means a lot more people can now dream of going abroad and you know having a better life. Uh, so this will also happen. Bhajaj had done that with consumer durables. Um you know, of course, it takes a lot more time. It's a hard problem. It takes a lot of uh, you know, being at it sort of thing. And so it is happening now. I think over the next five years, you will see a lot more students uh dreaming a lot more as well, and you know going towards courses. We we get messages for these as well. So, you know, from students which are very heartening. Um, I wanted to do a B tech, but I could only afford a B. So uh the gap is say around three lakh or four lakh. Can you guys do something about it? So that's when if we get in, we figure out that student, the institute figure out what happens, and if we are able to solve it for them and give that personal loan, it just makes our day.

SPEAKER_03 17:50

And and uh India is producing more graduates than ever, right?

SPEAKER_01 17:56

Of course.

SPEAKER_03 17:57

And uh very few get jobs. So what's what's the data that you get to see through Propel that most of us uh don't have any idea about?

SPEAKER_01 18:08

So we uh so I think some of these headline numbers makes it feel like you know, the engineering graduates do not get a job. I don't think that's really true though. Uh you know, in our experience, and we have some limited experience in that, I would you know, uh qualify that. We've worked uh uh you know majorly with institutes which are tier two and some tier three institutes. Tier one categories are your typical IITs and NITs and say the top you know 70, 80 odd engineering.

SPEAKER_03 18:47

Like how many we would have in tier one, how many tier two?

SPEAKER_01 18:51

Um tier one would be say close to around 70 or 80 institutes. Um tier two would be close to around 300, 250 to 300 institutes broadly, and tier three would be say around thousand, thousand five hundred, somewhere around that, and tier four and five would be enormous sort of institutes. I'm not even going there. So we've had uh experience of working directly on the ground with tier two and tier three institutes, and what we see there is that placements happen. Uh, you know, uh students are motivated, these are good students, they do something with their lives. It's it's not that tier two and tier three student pass outs are the ones who uh end up being unemployable sort of youth. Uh either they get placed through the institute, and typically we would say, you know, say close to around 50-60% sort of placement happening uh through the institute and you know anywhere from uh four lakh to six lakh sort of salaries, CTCs, which are good to begin with. And then these students figure out their own careers. Some of them move and get trained into say certification programs or some finishing schools before starting up uh you know small-time sort of jobs, some of them get into sales. But if you look at these students, say, you know, one year after having passed out, 80, 90% of them, 80 to 90% of them would be in a job and would be doing something or another, would be earning money. Uh so I don't, we don't see that as a problem. Of course, when it comes to tier four or tier five sort of institutes, um reports, of course, say that they're highly unemployable. Uh, I don't have a qualified answer for that, uh, you know, to be honest right now. But uh I think students, you know, figure out something or the other to do. There are uh, you know, uh, if not anything, they get into small-time sort of sales roles. They start off anything.

SPEAKER_03 21:09

There's also one data point that only 8% of uh students, graduate students, land jobs that match their education uh background.

SPEAKER_01 21:22

Um researched um you know, these numbers are. But yes, that's something that we really get into. So you know, which is in terms of ROI, like what the fees are and you know, in what time you get, what sort of income is that's a big input to our model as well to understand what has what sort of value to quantify value. Uh now we what we've started understanding over time is that uh Lot of these value, lot of this value is also sort of at a bunch of places, a lot of this value is straightforward. Say engineering, say MBA, or you know, tier two institutes, like I said, tier two, tier three, category of institutes, category of courses, it's very easy to sort of quantify. Some of this value is in terms of upward mobility in life, like a social upward mobility, which is very hard to quantify too, for which parents are willing to pay. Now, that's a debate on how you know whether that's justified or not, but you can't debate with a father who has saved for his daughter's uh say uh small B tech education, uh, because he believes that making his daughter a graduate will have uh will unlock better opportunities for her in social life in terms of whom she marries and where she ends up settling down and what sort of life she ends up have having. Uh that's a question for a you know, that's a debate. But people think that way. And I think that's a fair way to think about it. Uh I don't, it's it's very hard to quantify, right? As I don't think the I'm I'm sure the idea, like you mentioned, the idea of your parents coming in from a tier three place to a tier two city and doing everything that needs to be done, these are things which are way more long-term understanding of things, uh long-term understanding of the impact. It's hard to quantify that. But uh the general feel is that education helps.

SPEAKER_03 23:59

Yeah, definitely. I'm sitting here all thanks to them. Yes, talking to you.

SPEAKER_01 24:04

Yeah. No, same. We've had all similar stories. So uh so and we've we've seen that. Um and uh we get testimonials of that, uh, we get many students reaching out to us for that. So we definitely believe in that education story, and I think I agree education India has a quality issue, but we feel it's getting better uh directionally getting better. Of course, right?

SPEAKER_03 24:46

Of course, because we have uh few in tier one, but there is no limit if you go um to tier three, tier four institutions, right?

SPEAKER_01 24:56

Absolutely, right? As in, we want to be the guys who invest in the future of the country. Uh, these students are the future of the country, and it's it's like they are they're an input going into a processing engine, and after that, they're going to be an output which is different altogether. We want to be there. And uh, you know, of because we are a lending company, we have to be very careful with our risk and underwriting and understanding the segment too. It's easier for us to do that from a tier two place, and then slowly we start taking some of these learnings, testing the waters in a tier three, going deeper there, and that's our overall strategy.

SPEAKER_03 25:37

Lending is a very difficult space, and you guys didn't have any uh experience, at least in this room in it. You come from FinTech finance background, and I remember uh you discussing this in one of your past interviews that when you you were part of IIT Madras, right? You graduated from IIT Madras, and then you went to uh FMS to do your MBA in finance, and um, because you were interested in finance, then you joined a global bank and you kind of didn't like your job because what you had in your head was not the kind of work you were doing. But I think what you're doing now in Propel is exactly what you wanted to do.

SPEAKER_01 26:19

No, so in general, of course, lending is building a real business. Yeah, um you know, most times there's a lot of unglamorous hard work. Um you know, as a as an engineer, and you can imagine that. As an engineer, you love the you know intellectual problem statements, the fancy problem statements. Um in lending, a lot of the problem statements are uh you know used to be. Uh, in fact, the world has changed with a post-LLM sort of world right now. We're actually way more excited now. But a lot of the functions, so things like uh, you know, liability raising, things like governance, uh reporting, uh, investor relations, fundraising, are pieces which uh are traditional, have been done in a certain way, you know, compliance. So you do it in that way. And because uh we've we have a great team which does that, which supports us for that. And uh in a in a post-LLM world, it's a lot more fun because you can play around with a lot of risk and credit models, a lot of distribution strategies, you can rethink it.

SPEAKER_03 27:38

Can you simplify this part? I'm not able to understand like how post-LLM world changes things in this sector.

SPEAKER_01 27:45

Oh, it changes like crazy. You know, I if I were a person starting an NBFC right now, I would start thinking of a NBFC, you know, sort of a 10-person NBFC or a 50 person NBFC instead of a 400-member team that we have right now. Even that is crazy efficient, I but as I uh told you, right? As in uh as I sort of mentioned earlier, so we have what 400-member team doing one and a half lakh sort of loans. But uh yeah, as in every facet of a lot of facets of lending are being uh, you know, can be very uh AI first. Uh you have an opportunity of building those playbooks. So say for example, um the core heart of lending, which is around underwriting students, which is credit and risk. Now these models will only become better over time. So we've uh a weekend project helps us uh build uh the crystal score of institutes in a much more efficient, you know, efficient, much more scalable way, where one run can give us that score for the entire universe of institutes in the country and not do it in an older fashioned way of getting data and spending a lot of time having analysts there. You have, you know, at one point 100 analysts probably working for you if you want it. Um which means you can go deeper into that crystal score of institutes and courses, you can um, you know, look at way more signals. Uh uh so you know when you underwrite cases too, a lot of cases the the gap between so earlier the you know, every time it's always above a particular level are you know strong approvals which go through straightforward process, then there are definite rejects, and then there's a manual arm. And slowly that arm, that zone is sort of coming down, and a lot more decisions, better decisions, a lot more faster decisions, which means that overall uh the value that you can bring to the consumer in terms of being really fast, being able to give decisions uh as early as possible, help them uh in understanding where the stand is a lot more faster. What used to take, you know, three days earlier now is instant. In terms of journey, it's it's not an e-com journey. It's a compliance-focused, very hard journey that somebody goes through.

SPEAKER_03 30:36

Usually, how much time it takes for you guys to identify one institution and onboard the institution and then eventually disperse the loan.

SPEAKER_01 30:46

Earlier, for example, a new institute that comes up, which is not in our database, would take us uh the analyst's bandwidth to figure that out. And that means probably you know two, three days, assuming there are bottlenecks. It really does not take two, three days, it's probably hours, but then there's a value to the bottlenecks that are there, bunch of things. You'll pick it up after a point. Now it's a real-time thing. So you don't need an analyst. It ought it's a it's a you know few seconds to figure about that institute and put a score and being able to sort of give a loan now. So uh it fundamentally changes how you look at things, it fundamentally changes the distribution, the entire fulfillment journey also changes like crazy. Uh so you know uh being good from a, you know, having understood lending from a techies point of view, from an engineer's point of view. We had already engineered the process to be, you know, probably 5x to 10x more efficient than what uh other lenders typically do. And that's been a necessity-driven thing because we are not catering to an average ticket size of 30 lakh, 40 lakh. Our average ticket size would be, say, in a bunch of segments, one lakh, say in higher education, say close to around 4 lakh, 5 lakh, but in general, very low as compared to uh 30 lakh. So, you know, we were already operating at crazy efficiency, but now it just makes uh you know that efficiency way more exponential.

SPEAKER_03 32:21

So even with the ticket size of one lakh, average is one lakh, 1.25 lakh. Yeah, um the propelled is profitable. So, how do you see the next few years with LLMs and you know, ticket size? I assume would be the same only, right?

SPEAKER_01 32:36

No, so you know, of course the ticket size depends on the distribution.

SPEAKER_03 32:40

Earlier, you know, now more institutions can be onboarded.

SPEAKER_01 32:44

Yes, earlier we used to do also a lot more shorter tenor products, smaller ticket sizes like coaching loans, you know, certification loans. Over time, as we started building our capabilities in both risk and in uh raising debt. Um you know, on the on the liability side, we built our own NBFC. We've now started getting lines from banks to uh at rates which you know sort of great rates, close to around sort of 10% sort of levels. So, you know, 10, 9.5% sort of level. Now, you know, we have that ability to go into higher ticket sizes. So say 10 lakh loans, 20 lakh loans, even 40 lakh, say, you know, post-cRAD, MBBS sort of loans. So as that mix sort of changes, you know, our uh ticket sizes are going to increase. But even without that, our efficiencies are going up uh you know year on year. So I'll give you an example. In FI25, our net interest income was 75 crores. Uh in FI26, we are doing 150 crores, so doubled our revenues. In FI27, we will grow probably 80%, so 222 to 30 crores of revenues. Um, you know what our costs have been in FI25. If our costs, like total costs were say close to 70 crores, in FI26 it was 77, which is like 10% increase. 26 to 27 is another 10% increase. So while while our revenues are going up, say you know, 80%, 100%, our costs are being growing up at say 10% sort of level. Uh where we project us to be at FI 30, uh, you know, where we want to go for a public listing, we'll be close to around uh say around uh 6,000 crore sort of assets under management. We are right now at close to 1500 crores AUM. Uh AUM is also growing, say uh 50 to 60 percent year on year. Uh our OPEX honestly, we feel that we'll be at some two point, some two percent sort of level. And that is me honestly underselling it. As in there is actually a uh, you know, we see that it can actually be even lower, and that's crazy. Like if I compare it with some of the peers in abroad education lending or even scaled NBFCs at close to around uh 30,000 crore AUM scale, which is 5x of where we will be at FI 30, yeah, their OPEX would be close to 3.5%, 3% sort of level. So us being at a scale of 5x lesser, we are even more, we will be way more efficient. And that's already showing, and that is not taking into account um LLM's, you know, exponential power. This is just you know, engineering, which was pre-LLM sort of world. It's just focus and make things way more efficient. Uh so we have a team which does which has close to 10 people and they do close to around, sorry, my bad, 20 people and do close to around 1000 crores of dispersal in a uh you know in uh year. Uh not all teams are that way, but there is one team, there's a blueprint for that. Yeah, so there's one person doing 50 crores of dispersal, which is close to five crores in a month. It's unheard of.

SPEAKER_02 36:24

Yeah.

SPEAKER_01 36:24

So in a post-LLM world, it's going to be even more crazy, is what we feel. Uh so distribution fulfillment risk and credit.

SPEAKER_03 36:38

That we keep talking about how AI is going to take everyone's job. And this is and how you are, you know, using AI, making the processes so efficient within Propel that more students would be getting more loans and eventually, you know, getting better jobs.

SPEAKER_01 36:59

No, so it's it's its applications go beyond just you know being way more efficient.

SPEAKER_02 37:05

Yeah.

SPEAKER_01 37:05

It's about being better in terms of underwriting risk and underwriting credit.

SPEAKER_02 37:10

Yeah.

SPEAKER_01 37:11

It's, you know, we're leaving money on the table at some places. We are not able to service the people, all the students that we would like to. We're not able to do it on time, we are not able to be as efficient.

SPEAKER_00 37:22

Yeah.

SPEAKER_01 37:22

So, you know, that risk and underwriting model becoming deeper and becoming significant are a huge advantage. And then on the distribution side too, as in the way we imagine this is why are we imagining lending as a, you know, the way it has always been imagined? Which is, I want to buy a home. Now I come to somebody to get a loan. Why not think of uh lending? You know, people don't care about just the budget part of it, right? As in people care about the eventual outcomes. Are there can there be an ecosystem enabler which helps people piece together outcomes across the entire piece of the journey, help them take the right decisions and enable those outcomes. So I start from 12th, I start thinking about which career broadly, which careers sort of excite me, which directions I should go to, which institutes I should choose, which can give me a shot at my career, which courses, which institutes have the right fit for me, have the right ROI for me, move towards the right sort of corporates and build a career out. And through these entire pieces, lending is an enabler at the end of the day. Uh you what you ideally want is you want to empower people for outcomes that they want. And lending is just one piece of the puzzle. So it goes beyond just that is what we feel. Uh but yes, in a in a base level, definitely a hyper-efficient, hyper-personalized, uh, you know, a different beast of a lending company. Uh, you know, a different level of personalized and deep verticalized credit and risk engines, uh, you know, highly hyper-efficient. That is a level, that is one level. And then the other level definitely is more of an ecosystem helper or an ecosystem enabler. So yeah, we are definitely super excited.

SPEAKER_03 39:45

What are the most interesting courses?

SPEAKER_01 39:48

What are the most interesting courses? Look, interesting courses. Uh no, okay. So I would define them as value courses, as in the courses which actually build sort of real value. Now, when we go to undergrads, uh, and this the definition of which gives value is also changing over time. So in a post-LLM world, we feel uh MBAs will definitely have a lot more value, uh, especially engineers doing MBA. As an MBA is a lot more uh philosophical thinking, uh, understanding about business. And when you combine broadly, when you start doing two things together, uh you as a director of a you know multiple agent uh level world, you're you're supposed to be directors now. Uh you're supposed to play the orchestra as and be the orchestrator. So you being that will have value. So an MBA who builds is a builds a business sense, who builds a gut instinct, who has an engineering background, who can play around with uh you know LLMs will have a lot more value. Um we've seen a lot of uh these tier two, tier three institutes focus a lot more on uh you know AI labs and so on. I know there has been, you know, a bunch of things happen, you know, you know, a lot of news on uh you know universities showing uh some things which are not there, but you know, in my head, that's still value. As in if you have something for the students to interact with, students are naturally curious. You will start doing something around it. So uh, you know, the tier two, tier three institute, BTEC people, B Tech students will get a lot more exposure. Tier one, of course, they will have a lot of lot more value as well. I think there'll be a lot of value. I think interestingly, my bet is also on a lot of good arts graduates being a lot more valuable now. Uh, you know, now you're coding. Oh, you're coding and LLMs, you know, coding is going to be more uh sort of commoditized. So I think the real uh problem is for standalone courses or you know, students who do one particular thing, say for example, engineering, and from very tier four uh or tier five sort of places, which are not going to get into an AI sort of this thing world, uh, not going to prepare them for that. They are going to have an issue, but otherwise, as in we keep seeing that, right? As in in a post-LLM world, um people who are doing a lot of manual work which cannot be replaced are actually better. But say the lower encoders are now out, you know, it's it's they'll have to upskill. So, you know, positives and negatives, but that's what you know broadly I see. Uh doctors are not going anywhere. Uh you know, you only get better. It's uh, you know, I think uh yeah, that's the uh overall, that's my overall take on uh the space.

SPEAKER_03 43:18

And how has the space evolved in the last 10 years?

SPEAKER_01 43:23

So it's it's been a roller coaster uh evolution. When we started off, um of course we were very new to financial services and how to build a lending company. We did not understand.

SPEAKER_03 43:39

I think we can also talk about uh Milton Friedman's research paper. That's where everything started, right?

SPEAKER_01 43:47

Yeah, yeah, yeah. Of course, that's where everything started.

SPEAKER_03 43:49

Yeah, yeah. So like uh it was Bridgesh or Bibu. Yeah, Bibhu. So when you talked about that paper, uh how you both perceived. And then the next 10 years.

SPEAKER_01 44:02

So it's been um it's it's been uh quite a journey, as in so from Milton Friedman's paper, I think that was the genesis of the idea to you know pitching about it and talking to initial few investors, getting that confidence that yes, this is a large opportunity to be pursued. This is something which if you know, which is of value. Um and then getting to places where uh you know understanding about lending, understanding then about how that business model of lending has to be set up, uh, each and everything, as in, you know, the evolution has been in each and every function, I should say, uh, right from the overall vision to, you know, what is the meaning of library.

SPEAKER_03 44:59

What was the vision when you started?

SPEAKER_01 45:03

Very simple. Um, you know, we love education, you know, we love education. We would love to do something where students do not uh uh leave out a good option because they don't have money. Good students don't leave out a good option because they don't have money. Uh that part still remains.

SPEAKER_02 45:26

Yeah.

SPEAKER_01 45:26

Now we've gone to that place where we think about can we do more for students? Can we help them in ways which are beyond just lending, which helps them in their overall outcome? Uh lending is just one part of the puzzle, but every what everybody really wants is to get a certain outcome. That outcome is a career, that outcome is an ROI, that outcome is employability, you know, et cetera, et cetera. So, how do we help people along that way? Um that's been from a vision point of view, but you know, a lot of the functions that run right now what propelled were things we had zero idea about. So something like uh risk and credit, you know, which you know, when we initially started, it was something about us talking to students and you know, sort of taking a gut call versus right now where we have sophisticated models and AI models, it's been quite a progression from liability raise where we had zero idea of you know concepts of a term loan or uh you know, sort of PTC, DA rating, and so on, to be at a place right now where you know we have securitized products, we have our own NBFC license, we have you know banks as lenders, uh we have our own rating now, we've rated ourselves. It's been some journey. Um each of these functions, I should say, from collections to distribution to everything.

SPEAKER_03 47:02

There was a lot to figure out, right, in the first two years. And uh so before IQ and Stellaris invested, how many investors did you talk to? How was that journey for you guys? That's been a journey too, as in you know because I think for the last few startups you didn't raise any money.

SPEAKER_01 47:22

Last few, no, right?

SPEAKER_03 47:24

This was the first time you uh raised venture.

SPEAKER_01 47:26

Yes, this is the first time we raised venture. Spoken to close to 100 investors probably uh during that time.

SPEAKER_02 47:35

Yeah.

SPEAKER_01 47:35

So yeah, both during uh the IQ and Stellaris time and even before that as well. Together we would have spoken to 100.

SPEAKER_03 47:43

100. And out of 100, these two ways invested.

SPEAKER_01 47:48

Yes, there was um you know, IN as our early investor tool before IQ and Stellaris. Uh but yeah.

SPEAKER_03 47:55

And how much was the round size?

SPEAKER_01 47:58

Very little from what two crores maybe, if I'm right, for IN and close to two million for IQ and Stellaris together.

SPEAKER_03 48:07

Together.

SPEAKER_01 48:08

Uh, you know, if I remember correctly.

SPEAKER_03 48:11

And this was 2017 or 18.

SPEAKER_01 48:14

I think somewhere around, you know, the IQ and Stellaris round should have been somewhere around 18, if I'm not wrong, 18 or 19. Uh yeah, something like that.

SPEAKER_03 48:24

Okay. So two years it was bootstrap.

unknown 48:28

Yeah.

SPEAKER_03 48:28

Or the IM round. I am was part of the same round, right?

SPEAKER_01 48:32

No, it was a earlier round. Earlier round we were running on that. But yeah, we we've always run things very efficiently. So uh yeah.

SPEAKER_03 48:42

A very interesting journey.

SPEAKER_01 48:44

Yes, it's been uh some journey, and of course, founders, my founders being school friends from class six, with um, you know, like our parents know each other. We go to, if I go to go home to Bumeshwar, I'll be meeting, you know, both sets of no, all the three sets of course my parents as well. But uh yeah, that's a I I don't think I would have been able to do this as well, uh, or we would have been able to do this as well if not for these guys.

SPEAKER_03 49:17

But but how disagreements are resolved when friends are co-founders over food.

SPEAKER_01 49:24

So the good thing for us, we like the same food, we like the same things, we know each other's you know, choices, likes. So all we have to do is uh just you know, after disagreements, but it doesn't get personal because they know almost everything about you, right?

SPEAKER_03 49:43

Or or uh there's any fear that what if they leave? Because there there are times when you know that you can't do it without them, sure, and with them also it's difficult. No, so uh my husband is my co-founder, so yeah, coming from that.

SPEAKER_01 50:01

I can imagine, but um no, so uh it does get personal, but it's it it doesn't stay personal because we just know each other so well. Uh all we have to do is it if it becomes too hard, we will just have to go for a small trip to Humpy, just the three of us, or somewhere like that. Just the three of us, not talk about work, talk about everything else under the sun, you know, life. Uh and yeah, things get sorted.

SPEAKER_03 50:35

Is there any uh routine um also among you guys that maybe a weekly meeting or you know, this is uh very core to us.

SPEAKER_01 50:47

So this is like a daily thing in terms of so I think we are in, we would be in conversation as in, you know, me with Brajesh, me with Vivu, Vivu with Brajesh almost daily, as in we would walk into each other's room, spend time with them, call each other for lunch, uh, you know, call each other for going down to have a coffee or to have a juice. So, you know, go for a walk. So these sort of things are very natural for us. We don't have to put them in a ritual, yeah. Uh you know, so that happens very, very naturally for us. So even while, say, we are in different flows, we're sitting in different flows. I'll finish a call, I'll call Vivu, let's go down. We'll just go take a walk, we will just so it's very easy and natural for us actually.

SPEAKER_03 51:40

And uh, Victor, you guys are building at the intersection of uh EdTech, fintech. Um what's that one common mistake that you see all the founders in fintech making? And then we can cover ed tech also.

SPEAKER_01 51:57

Sure. But I would sort of clarify a little bit.

SPEAKER_03 52:00

Yeah.

SPEAKER_01 52:00

So I think uh you're right to a certain degree. In fact, you know, you're right to that degree. It's an intersection of ed tech and fintech. A lot of the work is majorly fintech, though. FinTech, right? And you know, say for example, you know, distribution is at one segment, is in the education segment. Understanding of that segment being deeper with create and risk is a ed tech thing more, but it comes with principles of fintech.

SPEAKER_03 52:30

FinTech.

SPEAKER_01 52:31

Uh, but having said that, um I think one of the pieces which we have done really, really well, and you know, a lot of I see people making that mistake, and this is all thanks to Bebhu, uh, who comes with a very fundamental approach. I'd actually cover two things, you know, who comes with a very fundamental approach is uh have very uh you know clear idea and very clear, you know, picture of what our biggest metric is. For us, our biggest metric is our NPA rates, is our, you know, it's a reflection of our credit underwriting and risk uh underwriting capability. Everything else comes below it, growth comes below it, you know, unite economics comes below it. First piece is NPAs, because credit losses have different uh have a you know high order effect. Uh once your credit losses start coming in, it's very hard to come back as a company, as a lending company. Your liabilities uh you're not able to raise liabilities, uh, your unit economics goes out, and you know, you just cannot make a comeback. So our you know, the principle that we operate with is NPAs are rank one, unit economics is rank two, growth is rank three. Uh so you know, and that's actually worked well for us.

SPEAKER_03 54:14

Well, thank you so much, Victor, for uh spending time with me. I I was really excited for this conversation, and this was really very insightful for me. I could understand the whole space, uh, and I'm really excited for the next uh coming years for you guys.

SPEAKER_01 54:31

So are we. It's uh it's a fun time to be in. Uh, you know, as a founder, it feels like you have superpowers now.

SPEAKER_03 54:41

Yeah. Thank you. And all the best with the journey.

SPEAKER_02 54:46

Thank you. Thank you. Thanks for having me.