You can now invest in short-term loans issued by IDF Eurasia

03.02.2021

mintosblog

We’re happy to announce that IDF Eurasia is expanding its loan offering on Mintos with payday loans.

Key takeaways

• Payday loans will be available with interest rates of up to 12.5% for loans listed in EUR, and up to 18% for loans listed in KZT
• In addition to a buyback obligation, payday loans will be secured by a pledge on the full payday loan portfolio
• The Kazakhstan market has grown 30% in 2020, despite a temporary decline due to the Covid-19 pandemic

IDF Eurasia payday loans will be listed as short-term loans on Mintos, and will launch with interest rates of up to 12.5% for loans listed in EUR, and up to 18% for loans listed in KZT. The loans will have a Mintos Risk Score of 7 and a buyback obligation, and the lending company will keep a 10% skin in the game.IDF Eurasia has been offering payday loans to its customers since 2014, and they contribute approximately 70% of the group’s revenue and 28% of the company’s revenue. IDF Eurasia is a leading micro-lender in Kazakhstan with over 1.8 million registered customers. Payday loans in Kazakhstan have loan amounts of € 30-280 (€ 120 avg) and maturities of 7-45 days (25 days avg). Borrowers are typically 28-38 years old.

To ensure transparency for investors, payday loans will be issued through a separate company, FintechFinance. The company was established in Kazakhstan as a microfinance organization and is regulated by the National Bank of Kazakhstan, including monthly monitoring of financial and operational covenants. FintechFinance will publish its financial results on a quarterly basis and will be audited on an annual basis.

To provide additional security to investors on Mintos, payday loans come with two special credit enhancements: FintechFinance will enter into an exclusive pledge agreement with Mintos under which the full portfolio of payday loans is pledged as collateral, and any liabilities from payday loans on Mintos are fully guaranteed by OnlineKazFinance, IDF Eurasia’s other Kazakhstan entity.

The outstanding net portfolio of IDF Eurasia in Kazakhstan is € 80 million as of 1 Dec 2020, and the outstanding portfolio of payday loans is € 6 million as of 1 Dec 2020.

Boris Batine, CEO of IDF Eurasia, comments: 

“Since its arrival in Kazakhstan, the company seeks to promote social inclusion, transparency, creating a bond with the community and improving awareness and financial literacy to achieve a secure future and a better standard of living. That strategy indeed has paid off over time as we became market leader in Kazakhstan. Following rapid market recovery and unprecedented demand for online products in late 2020, we expect 2021 to be an exceptional year for digital lending in Kazakhstan. At IDF Eurasia, we are thrilled to offer a new investment opportunity for our well-established Mintos investors’ base.”

About the Kazakhstan market 

The demand for loans temporarily declined in April-May 2020, and gradually recovered in Q3-Q4. The overall market growth was 30% in 2020, while IDF Eurasia portfolio in Kazakhstan doubled in the same period. The share of unsecured loans in the Kazakhstan market increased from 79% to 95% in 2020.

The microfinance industry in Kazakhstan is thoroughly regulated. The interest and penalty charge was capped in 2019. In 2020, all microfinance organizations became regulated by the National Bank of Kazakhstan, with mandatory monthly reporting of financial covenants, portfolio performance, and financial statements. From 2021 IFRS reporting will be mandatory. IDF Eurasia publishes quarterly IFRS reports, and the company is subject to an annual external audit.

How IDF Eurasia manages risk

The risk management system at IDF Eurasia aims to maximize profits with strict credit risk management. The company has 5+ years of market experience in Kazakhstan, and its scoring models have all the necessary statistics. The credit risk team in Kazakhstan constantly adjusts the scoring model, which is based on a deep stratification of the client base. The multi-layer integrated risk management system includes the client’s identification, credit history check, fraud prevention check, devices check, application and behavioral scoring and financial data check.

About IDF Eurasia

IDF Eurasia is the market leader in online lending in Russia and Kazakhstan. The company uses state-of-the-art technology in its decision-making system, adheres to principles of responsible lending and contributes to the sustainable financial development of society. IDF Eurasia has been recognized as the most innovative financial company with the Innovation Time Award. Solva has entered the list of top five major MFIs according to the National Bank of Kazakhstan.

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