India's credit card market is witnessing a shift as fintech companies seek to extend formal credit access beyond metropolitan cities. While traditional credit card issuance has largely depended on income verification, credit history and unsecured lending models, FD-backed credit cards are emerging as an alternative for first-time borrowers and financially underserved consumers.
At the forefront of this transition is novio, a fintech brand focused on expanding access to secured credit cards through banking partnerships. According to its founder, Aditya Gupta, the company has crossed 2 lakh customers in its co-branded credit card business, with approximately 65% of its customers coming from Tier 3 cities and beyond. Its model allows eligible customers to begin with a fixed deposit of ₹2,000 and access a credit limit equivalent to 90% of the deposit amount.
The company's expansion reflects a broader transformation in financial inclusion in India, where digital payments, alternative credit models and banking partnerships are helping financial services reach previously underserved markets. Its collaboration with Indian Overseas Bank is part of this strategy, bringing together public-sector banking infrastructure and digital-first credit distribution.
In an exclusive conversation with Srajan Agarwal, Founder & Editor-in-Chief of News4Bharat, Aditya Gupta, Founder of novio, discusses the company's revenue model, growth milestones, FD-backed credit card offerings, and expanding footprint across smaller Indian cities. He also shares insights into the future of India's credit-on-UPI ecosystem, the company's banking partnerships, fundraising roadmap, upcoming SME and premium card products, and the regulatory environment shaping India's fintech industry. Edited excerpts from the interview follow.
Q1: Does novio charge the bank or the consumer? How does the revenue model work?
The product is completely free for consumers, with no charges for owning the card. Our revenue model is built around three primary streams. The first is interchange income. Whenever a customer swipes their credit card at a merchant, the merchant pays a Merchant Discount Rate (MDR) of around 1.5–2%.
A significant portion of the interchange income generated through these transactions accrues to novio. The second is interest income. When customers do not pay their outstanding dues on time, interest is charged, and novio receives a significant share of that revenue.
The third stream comprises fees, including late payment charges, other programme-related fees and interest income associated with EMI transactions.
Q2: What bottlenecks or pain points in the market are novio solving, apart from those already described?
The credit card ecosystem has traditionally been built around an unsecured lending model, where banks take on the risk of lending to consumers without collateral. Naturally, banks are cautious about whom they extend credit to. Around 90% of private bank credit card business is concentrated in the top 40 cities, primarily because collection infrastructure is available there.
Private banks account for a significant share of the market, while public sector banks and a few other players have historically played a smaller role in certain segments.The problem is that collection infrastructure becomes limited beyond major cities, and banks have traditionally not served customer profiles such as self-employed individuals, junior employees and small business owners as effectively.
We are addressing this gap through an FD-backed secured credit card. Because the card is backed by a fixed deposit, it offers a way to extend credit access without relying on the traditional unsecured underwriting model. In the last year, we have issued at least one card in 15,000 pincodes.
Around 65% of our cards come from tier 3 cities and beyond. We are taking credit cards to parts of India that have historically been underserved. This is similar to how Amazon and Flipkart have expanded into tier 5 towns. With UPI making digital payments accessible across the country, consumers in smaller towns are increasingly comfortable with digital financial products. We believe credit card adoption can follow a similar trajectory.
Q3: How many customers has novio served since inception?
We are just crossing 2 lakh customers on our co-branded credit card business. We have served more customers through our distribution business, but the 2 lakh figure specifically refers to customers on our own co-branded card portfolio.
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Q4: What is the ticket size a consumer can avail?
A customer can start with a fixed deposit of as little as ₹2,000. The credit limit is 90% of the FD amount. For example, a ₹2,000 FD gives the customer a credit limit of ₹1,800, while a ₹5 lakh FD translates into a credit limit of ₹4.5 lakh. This allows customers to begin with a small amount and increase their credit limit as their financial capacity grows.
Q5: What is the split of traction between tier 3–4 and tier 1–2 markets?
Around 65% of our customers come from tier 3, tier 4 and tier 5 cities, while approximately 17–18% come from tier 2 cities. Together, tier 2 and smaller cities account for roughly 80% of our customer base.
The aspirations of a customer in a small town are no different from those of someone living in a metropolitan city. Information is readily available, and credit cards are an aspirational product. Our objective is to make that product accessible to people who have traditionally been excluded from the ecosystem. Think of how airports have opened up in smaller towns and airlines such as IndiGo have made air travel more accessible. The same underlying shift is possible in financial services.
For instance, we offer a BookMyShow buy-one-get-one-free ticket benefit, which banks typically reserve for premium customers, even to customers who begin with a ₹2,000 FD. The benefit is used every month across more than 400 cities. In Malda in eastern India, customers book tickets worth ₹90 and get another ₹90 ticket free. Our customers use their cards for everyday expenses, including groceries, travel, electricity bills and petrol. This is not simply about giving people a card; it is about making the benefits of credit cards available to a much wider population.
Q6: How do you screen fake applicants? What parameters do you use for background verification?
Since our product is backed by a fixed deposit, the lending risk is secured by the customer's deposit. This substantially changes the underwriting process, and traditional credit bureau scores are not central to our eligibility assessment. Age is an important criterion. A customer must be at least 18 years old to enter into a contract, while our current upper age limit is around 65–70 years. A credit card is a full-fledged banking product, so customers must complete video KYC, just as they would for other banking products. Beyond the applicable KYC and eligibility requirements, the FD-backed model allows us to make the product accessible to a broad range of Indian citizens.
Q7: What are your plans for FY2026–27 and the next three to four years? Are you considering diversification or international expansion?
There is so much left to solve in India that we are not considering international expansion for at least the next five years. India has only around 11–12 crore credit cards and approximately 5 crore credit card customers, while there are roughly 40 crore UPI users who do not have credit cards. That represents an enormous opportunity. We intend to remain focused on credit cards. Like SBI Card, which concentrates on its core card business rather than expanding into insurance or investments, we do not intend to become a super app.
Within the credit card category, however, we see considerable scope to develop products for specific use cases and customer profiles. One upcoming product is an SME card aimed at shopkeepers and small businesses. It will follow the same FD-backed model but offer benefits relevant to business owners, such as discounts and tax-related benefits. We are also looking at a premium metal card backed by an FD. This would cater to customers who have greater financial capacity, travel internationally and want access to premium credit card benefits. For example, a customer could place an FD of ₹1 lakh and obtain a card designed around those needs.
Our strategy is to deepen our presence in the credit card market by serving different customer segments rather than diversifying into unrelated businesses.
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Q8: You raised ₹100 crore earlier. Are there plans to raise more funds?
Yes. We expect to begin our next fundraising process from January onwards, with the process likely to start over the next three to six months. We have not yet finalised the size of the round. Under our current model, we fund customer acquisition ourselves. Our existing capital is sufficient to take us to approximately 3–4 lakh cards over the next year.
To cross 10 lakh cards, or one million cards, we will need another funding round. At that scale, we expect the business to become self-sustaining. By March, we expect to reach pre-CAC breakeven. This means our revenue should cover all expenses other than customer acquisition and technology. After that, our primary investment will be in acquiring new customers, and we expect the business to reach full breakeven, including customer acquisition costs, in approximately another year.
Q9: Can you share more about the Indian Overseas Bank (IOB) tie-up?
Indian Overseas Bank is our latest banking partner. The partnership brings together the trust and reach of an established public sector bank and novio's digital-first approach to credit. Our shared objective is to make credit cards more accessible to people who have traditionally been underserved by the banking system. IOB has many good customers but has historically faced limitations in offering them a compelling credit card product. Through this partnership, an existing IOB customer can now access a credit card without having to approach another bank.
For IOB, the partnership also creates an opportunity to acquire new customers at a lower cost. Customer acquisition is a challenge for many public sector banks, particularly when it comes to younger consumers. Gen Z customers do not always naturally gravitate towards public sector banks, although many view them as among the safest places to keep their money.
This product bridges that gap. It allows customers to retain the trust associated with a public sector bank while gaining access to a simple, digital pathway to credit. We are seeing encouraging traction from both existing IOB customers and new customers coming through the partnership. We believe this collaboration can play an important role in extending credit card access to a broader section of the population.
Q10: What is your take on RBI regulation in the fintech sector? Is there any policy change that would help your domain?
In my view, the RBI has been relatively proactive and accommodating in the credit card business compared with many regulators globally. Some large startups have faced challenges when they built businesses around interpretations of regulations that did not ultimately hold up. novio is not directly regulated by the RBI in the same way as a bank, as our business structure does not require that. Nevertheless, we find the regulatory environment conducive to innovation in the credit card ecosystem.
Co-branding regulations have been in place for around 20 years, and the RBI has continued to update them as technology and consumer behaviour have evolved. RuPay cards can now be linked to UPI, and banks and fintechs have opportunities to test new ideas within the regulatory framework. As far as the credit card ecosystem is concerned, I do not believe there is a major regulatory gap that needs to be addressed right now. We have the whiteboard to play on.
Internationally, students often begin building their credit history through secured credit cards backed by deposits, and I believe India will follow a similar path. FD-backed credit cards can help bring more Indians into the formal credit ecosystem while managing lending risks. The next step is building consumer awareness and making this a familiar product category. We have also spoken with NPCI about the possibility of an industry-wide campaign, along the lines of those for mutual funds and insurance, to educate consumers on the benefits of FD-backed credit cards and encourage wider adoption.
Disclaimer: The views, opinions, projections, and claims expressed in this interview are solely those of the interviewee and do not necessarily reflect the editorial position of News4Bharat. Financial figures, business milestones, and future plans are based on information shared by the interviewee. This content is intended for informational purposes only and should not be considered financial advice or an endorsement of any product or service.
About the Author: Srajan Agarwal is the Founder and Editor-in-Chief of News4Bharat, a digital news platform covering business, technology, finance, policy, and emerging developments across India. Through exclusive interviews and editorial features, he brings industry perspectives, leadership insights, and emerging trends to a wider audience.
About the Interviewee: Aditya Gupta is the Founder of novio, a fintech brand focused on expanding access to secured credit cards in India. Through FD-backed credit products and strategic banking partnerships, including Indian Overseas Bank, novio aims to make formal credit more accessible to first-time borrowers and underserved consumers, particularly in Tier 2, Tier 3, and smaller cities.