Should Jupiter loosen lending rules for thin-file users to grow its loan book?

Introduction

Jupiter lends through its own NBFC and partners: personal loans, mini loans, On-Demand Salary advances and loans against mutual funds. Lending is central to its path to profitability. The growth team wants to loosen underwriting for small-ticket personal loans by approving thin-file users (those with little or no credit bureau history) using account aggregator (AA) data and in-app behaviour. The risk team worries this will push up defaults at a time when regulators are watching unsecured retail credit closely. The trade-off: grow the loan book faster by approving more thin-file users, or keep strict bureau-based rules to protect credit quality?

Step 1

Clarifying Questions (3 minutes)

• What does "loosen" mean? Assume approving users with bureau scores below the current cutoff or with no score, if AA data shows stable income and healthy cash flow.
• Loan size and tenure? Assume ₹10,000–₹50,000 over 3–12 months.
• Whose balance sheet? Assume the NBFC's own book, so Jupiter bears losses directly. Co-lending partners may also be involved.
• Current performance? Assume approval rate of 22% and 90+ days past due (DPD) rate of 2.5% on the existing book.
• Regulatory context? RBI raised risk weights on unsecured consumer credit for banks and NBFCs in late 2023 and continues to watch small-ticket loans; digital lending guidelines require transparent pricing and fair collections.
• Goal horizon? Assume the company wants loan book growth over the next 12 months but cannot afford a loss spike before profitability.