At Byju’s, a loan crisis and no sign of funding

Oh no! Anyway!

Here’s how these loans work. When a product is sold to a customer via a third-party loan provider, a loan is created by the third party for the customer. As soon as the loan is processed, the customer gets the product and Byju’s gets money from the financer, net of the interest cost. EMIs start. If the customer cancels the product or defaults on EMIs, Byju’s is supposed to close the loan by paying the balance amount to the financier because of the 100% default guarantee it provides its lending partners. “Byju’s used to process and close these loans within 30-40 days of default, but now the company is delaying it as there is no money. So instead of closing the loan, the company is paying EMIs on the customer’s behalf,” says the person quoted above. “Refunds are being processed in batches after a delay of 90-120 days [and even more in some cases], as and when they get money from new sales.

Countdown for Byju bankruptcy is on