Spense builds secured credit infrastructure that lets Indian banks launch asset-backed cards and credit lines without tearing out their old core systems. The Bengaluru startup has now raised $2.8 million, or about ₹27 crore, in a seed round led by Arkam Ventures, as lenders get a lot more careful about unsecured retail credit. That caution is the whole opening here: small-ticket loans can grow fast, but defaults and recovery costs can wreck the math just as quickly. Founded in 2022 by Pawan Kumar and Srinivas Krishnamurthy, Spense is betting that the next big lending buildout in India won’t start with better guesswork on risk. It’ll start with collateral.
What is Spense funding building in secured credit infrastructure?
Spense’s secured credit infrastructure is a bank-facing software layer for launching products like secured credit cards and reusable credit lines backed by customer assets such as fixed deposits, mutual funds, insurance policies, and other financial holdings. A bank plugs Spense into its existing systems, maps an eligible asset, creates a revolving limit against that asset, and then lets the customer spend through a RuPay credit card, a UPI credit line, or another payment rail. The key point is simple. The customer experience feels like digital credit, while the lender still has collateral underneath.
That matters because the old journey is clunky. A customer who needs a fresh loan usually has to apply again, upload documents again, and wait again. Spense is trying to turn that into a standing line of credit that can be used, repaid, and reused. More like a credit card than a one-off personal loan.
Its latest product is CLOU, short for Credit Line on UPI. The idea fits neatly with India’s payment rails. NPCI launched Credit Line on UPI in 2023, giving banks a new way to offer formal credit directly through the UPI interface instead of forcing every use case through a plastic card.
Banks care just as much about the second layer here: operations. In secured card programs, somebody still has to handle screening and decisioning. Card origination, management, controls, billing, collections, and the logic around releasing or enforcing collateral still need to work too. Competitors in this market talk openly about those steps because they’re exactly where legacy banks get slowed down. Spense’s pitch is that banks shouldn’t have to rebuild all that plumbing just to launch a modern secured product.
Who founded Spense before the funding round?
The idea behind Spense funding
Spense was started in 2022 by Pawan Kumar and Srinivas Krishnamurthy. Their thesis is blunt: unsecured lending is getting harder to scale profitably, especially at the small-ticket end where default recovery can cost about ₹1,000. If the loan itself is only ₹2,000 or even ₹10,000, one bad outcome can wipe out the upside from a bunch of good ones.
That’s why Kumar’s line from this round lands so cleanly: “We cannot underwrite the next 300 Mn Indians the same way we underwrote the first 150 Mn.” He’s not saying underwriting data is useless. He’s saying the starting assumption should change.
Why the founders look credible
Kumar’s background is in applied science at Uber India, while Krishnamurthy previously worked as a technical lead at BNP Paribas. That’s a pretty specific mix for this problem. One side brings modeling and product thinking. The other brings experience with bank-grade systems and rails. It also helps explain why Spense isn’t trying to be a consumer lender. The company sits one layer lower, inside the infrastructure banks use to launch and manage credit products.
Before this seed round, Spense had already positioned itself around programmable banking infrastructure rather than a single narrow card workflow. In its earlier pre-seed round, the company was described as building infrastructure for secured credit cards, forex programs, prepaid programs, and connected banking flows. That broader starting point matters because CLOU looks less like a random new feature and more like the next logical product on the same stack.
Early traction and the new round
The operating numbers are strong for a seed-stage infrastructure startup. Spense works with 7 major banks across India and powers more than 2 lakh active cards. It issues over 40,000 cards every month. On its own math, that’s close to 8% of India’s monthly credit card issuances.
Arkam Ventures led the $2.8 million seed round, with Razorpay Ventures, GrowthCap Ventures, and Atrium Ventures also participating. Before that, Spense had raised a $1.85 million pre-seed round led by GrowthCap Ventures.
How Spense compares with other secured credit infrastructure players
Spense isn’t alone in bank-tech plumbing. M2P sells an API-first stack for deposits and lending. It also handles cards, fraud, compliance, onboarding, and collections. Hyperface positions itself as a credit-cards-as-a-service platform with ready SDKs, PWA tooling, analytics, and fast co-branded launches. Zeta sits higher up the scale curve, selling card-processing and banking software used by large institutions for digital onboarding and instant issuance.
Spense is narrower, and that’s probably the point. It’s building around secured, asset-backed credit from day 1, then extending that into Credit Line on UPI. Legacy alternatives are even messier: banks either build much of this in-house or stitch together multiple vendors across onboarding, card management, risk, collections, and payments. Spense’s edge is that it packages secured credit and reusable lines into one bank-ready layer. Payment access is part of the same system, instead of an afterthought.
Why are investors backing secured credit infrastructure now?
This round matters because it gives Spense room to push beyond secured cards and make CLOU a real bank product, not just a demo-worthy concept. If that works, banks get a way to serve first-time borrowers without jumping straight into pure unsecured risk. That’s a useful wedge.
There’s also a credit-building angle that’s easy to miss. Spense wants banks to start customers on collateral-backed revolving lines, watch repayment behavior for 6 to 12 months, and then gradually open up unsecured limits as trust is earned. Kumar compares that to the secured-card journey many immigrants in the US use to establish a credit file. For India, that could be a smarter bridge for homemakers, retirees, informal workers, and small business owners who do have assets but still don’t show up well in standard underwriting models.
Investors aren’t just backing volume. They’re backing a cleaner risk structure. When the collateral is already pledged, collections look very different, and so do unit economics. That’s a lot more interesting to bank partners than another pitch about a slightly better scoring model.
Why is India warming up to secured credit infrastructure now?
The timing lines up with a clear shift in the market. In March 2025, TransUnion CIBIL said 41% of India’s first-time borrowers were Gen Z. It also noted that 40% of new-to-credit consumers enter formal borrowing through consumption-led products such as credit cards, personal loans, and consumer durable financing. But originations in those consumption-led products for new-to-credit borrowers were down 21% year over year in the quarter ended December 2024, showing how much lender caution had already kicked in.
By the quarter ended December 2025, CIBIL’s overall Credit Market Indicator had improved to 102 from 97 a year earlier, helped by higher gold-loan supply and stronger participation from first-time borrowers. That’s the interesting part. Growth is still there, but the center of gravity is moving toward products with clearer collateral or tighter control.
Banks have had regulatory reasons to rethink risk too. In November 2023, the RBI increased risk weights on unsecured consumer credit from 100% to 125%, while excluding categories such as housing, education, vehicle loans, and loans secured by gold and gold jewellery. That didn’t kill unsecured lending, but it did make lenders more selective.
There’s also sheer borrower volume. India’s new-to-credit borrower base reached 4.4 crore in the 12 months ending February 2026, up from 3.6 crore 4 years earlier. That’s a huge pool of people who may have savings, deposits, or other financial assets before they have a deep credit history. Products built on secured credit infrastructure are trying to turn that mismatch into a business.
What should readers watch next?
Spense has picked a tough but timely lane. It isn’t promising magic underwriting. It’s trying to make secured lending feel as instant and reusable as the best digital credit products.
If Spense can turn bank partnerships into large-scale CLOU rollouts, it won’t just be another fintech funding round. It could become an early signal that India’s next phase of credit is getting more collateral-aware and more reusable.
Read how Oxmiq Labs raised a $35M Series A co-led by Fundomo and Samsung Catalyst Fund to scale its licensable GPU architecture, helping chipmakers build custom AI silicon with lower costs and CUDA-compatible software.
FAQ
- What funding did Spense raise? Spense raised $2.8 million in a seed round worth about ₹27 crore. Arkam Ventures led the round, and Razorpay Ventures, GrowthCap Ventures, and Atrium Ventures joined in. The company had also raised a $1.85 million pre-seed round earlier.
- How does Spense’s platform work for banks? It gives banks a software layer to launch asset-backed revolving credit products without replacing their existing core systems. A bank can map collateral like a fixed deposit or mutual fund to a reusable limit, then let the customer spend through a RuPay card, a UPI credit line, or similar payment rails.
- Who are the founders of Spense? Spense was founded in 2022 by Pawan Kumar and Srinivas Krishnamurthy. Kumar came from applied science work at Uber India, while Krishnamurthy previously worked at BNP Paribas, which gives the founding team a mix of data, product, and banking-systems experience.
- Is Spense a lender or a banking infrastructure startup? Spense is a banking infrastructure startup, not a balance-sheet lender. It builds the secured credit infrastructure banks use to issue cards and credit lines, manage workflows around collateral, and distribute those products through payments channels like cards and UPI.
