Tag: lending

Fintech start-up LenDenClub turns profitable in Q4 of FY21

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Three-year-old fintech start-up LenDenClub, a peer-to-peer lending platform, has disbursed loans worth nearly ₹600 crore in FY21, up from ₹60 crore in the previous fiscal and has turned profitable in Q4 of FY21.

The company is eyeing a five-fold growth in the next two years and aims to disburse ₹1,200 crores worth of loans in FY22.

The company has provided loans to over 1,30,000 unique borrowers and cumulatively 3,60,000 loans, primarily to young salaried professionals. It processes over 25,000-30,000 loan applications and disburses about 15,000 loans every month. The P2P lender currently has a user base of over 15 lakh borrowers and 4.5 lakh lenders on its platform.

Business growth

“At LenDenClub we have grown 1,000 per cent y-o-y and 43 per cent of our customers are repeat customers who rely on us during their tough times. Even amidst the pandemic, we identified the consistency in the investment flow and business grew exponentially. We have seen a considerable growth with respect to all aspects of our business – be it business numbers, headcount/manpower, geographic reach etc. As a company we are growing very fast, thanks to our collaborative team efforts, and became profitable in FY20-21. Our sustainable focused approach has helped us become the first P2P lending company in the industry to turn profitable as on Q4, 2021,” Bhavin Patel, CEO and co-founder, LenDenClub told BusinessLine.

“We believe that the current year will also witness muted growth in the first quarter and then grow exponentially over the next three quarters,” he said.

Recently, LenDenClub also became the first P2P lending company to integrate with Google Pay, going live on its platform, allowing customers to borrow and lend seamlessly, along with making payments. Additionally, the fintech lender has expanded its flagship digital lending platform InstaMoney pan-India.

Financial inclusion

From its presence in seven States, the company has expanded its offering to borrowers from over 19,000 pin-codes. This has benefited population living in rural regions not covered by banks especially, in the small ticket loan category of up to ₹10,000. The company has one of the lowest NPAs in the digital lending space of 3.95 per cent.

LenDenClub aims at fostering financial inclusion and in serving the marginalised, low-income groups and credit-starved MSMEs. The company hopes to scale up disbursement volumes to ₹500 crore on a month-on-month basis by FY23-24, while working towards becoming one of the top lending institutions in the country.

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Yes Bank turns focus to lending after winning back depositors

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Yes Bank Ltd., the target of India’s biggest financial bailout, will focus on boosting lending to businesses this year after winning back depositors, Chief Executive Officer Prashant Kumar said.

Regaining depositors and raising capital were the first order of business for Kumar, who took over the reins of Yes Bank in March 2020 after regulators seized the lender to prevent its imminent collapse. A year later, its deposits have grown nearly 55% as opposed to losing 40% of the total before the bailout.

“We have achieved our target for derisking our corporate book,” Kumar said in an interview to Bloomberg News on Saturday. “Getting back on the front-foot of lending and accelerating our bad loan recoveries will be the key focus areas this year.”

Yes had shrunk its exposure to businesses to de-risk its balance sheet after a history of lending to weak companies under former co-founder and ousted CEO Rana Kapoor. Piling bad loans, poor capital ratios and flight of depositors led to the bank’s downfall, leading to its seizure and transfer of control to a group of lenders led by State Bank of India.

The bank will aim to grow its corporate loan book by 10% now, Kumar said, versus a 11.7% contraction last financial year. The focus will also be on expanding the less-risky retail and small businesses lending by 20%, he said.

Virus Impact

Kumar is confident of recovering at least ₹5,000 crore of soured debt in the current financial year even as activity curbs to stem a second coronavirus wave in India adds to the economy’s pain and threatens to push up banks’ bad loans going ahead.

“Last year, it was a complete lockdown,” Kumar said. “Economic activity is much better now. Also, this time we have vaccinations. We are quite optimistic.”

 

The bank incurred a loss of ₹3,790 crore ($512 million) in the quarter ended March as it stepped up bad loan buffers. Its gross bad loan ratio was 15.4% as of end of March, an improvement from 20% level in the three months prior.

Kumar has reasons to believe the worst is over and says the bank will not need to significantly step up its provisions that have acted as a big drag on its profitability so far. Yes Bank expects less than ₹5,000 of slippages with most of it likely from its ₹13,700 crore of stressed book, he said.

The lender has approval to raise up to ₹10,000 of capital, but it might not need to do so this year unless there is a massive lending opportunity. It had raised $2 billion last July.

“Life is always full of challenges and especially if you are running a bank which was almost about to collapse just a year back,” Kumar said. “This journey will definitely be challenging.”

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BoB reduces repo-linked rates by 10 bps to 6.75%, BFSI News, ET BFSI

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MUMBAI: State-run Bank of Baroda announced a 10 basis points reduction in its repo-linked lending rate from 6.85 per cent to 6.75 per cent, effective from Monday. With this revision in Baroda Repo Linked Lending Rate (BRLLR), the lender is offering home loans at a rate starting from 6.75 per cent and car loans beginning from 7 per cent.

Mortgage loan rates will start at 7.95 per cent and education loans at 6.75 per cent, the bank said in a statement.

“This reduction in BRLLR makes our loans more affordable for customers. We hope that our efforts towards the digital processes help customers avail quick and smooth loans at the most competitive interest rates,” the bank’s General Manager (mortgages and other retail assets) Harshadkumar Solanki said. HV MR

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U GRO Capital launches GRO Micro, adds 25 branches

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U GRO Capital has launched a dedicated distribution channel called GRO Micro to help lending services for the unorganised micro businesses in non-metro markets.

It has expanded its distribution network by adding 25 branches across five States — Karnataka, Tamil Nadu, Gujarat, Telangana and Rajasthan.

U GRO Capital sees disbursements at pre-Covid-19 level

Shachindra Nath, Executive Chairman and Managing Director, U GRO Capital, said the company aims to reach over five lakh small businesses across these five States through the launch of GRO Micro.

Covid-19 lockdowns: How much did the unorganised sector lose?

“We intend to carry our experience from these locations and expand our network by a further 75 branches by the end of 2021-22,” he further said.

Small-ticket loans

“The company aims to offer small-ticket loans secured against property, as well as unsecured loans, to micro businesses to help them in sustenance and stability in the post-pandemic era, meet their working capital needs to fix broken cash flows and cater to their business expansion needs,” it said in a statement.

With GRO Micro, U GRO Capital now has an extensive network of 34 branches and presence in eight States across the country.

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RBI to come out with paper on regulatory framework for lenders in MFI space

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The Reserve Bank of India (RBI) on Friday said it would come out with a consultative document “harmonising the regulatory frameworks for various regulated lenders in the microfinance space” in March 2021.

In its statement on Developmental and Regulatory Policies, the central bank said there is a need to review the regulatory framework for Non-Banking Financial Company – Micro Finance Institutions (NBFC-MFIs) given the constantly evolving milieu in the financial sector.

The RBI had recently released a discussion paper on revised Regulatory Framework for NBFCs – A Scale Based Approach.

“There is a case for a framework that is uniformly applicable to all regulated lenders in the microfinance space, including scheduled commercial banks, small finance banks and NBFC-Investment and Credit Companies, rather than prescribing these guidelines for NBFC-MFIs alone. Accordingly, the RBI will come out with a consultative document harmonising the regulatory frameworks for various regulated lenders in the microfinance space in March 2021,” it said.

Welcoming the proposed move by RBI, MFIN, the association for microfinance entities and the self-regulatory organisation for NBFC-MFIs, said this would help bring sustainable growth for the sector.

“This is indeed a welcome step for the sector. Considering the diversity of players in microfinance today, it is the need of the hour and MFIN has been pro-actively working on this through its Code of Responsible Lending (CRL) and also requesting RBI on the need for asset class-based regulation. This is a very important move as it will augur well for the sector as a whole and further safeguard the interests of customers. MFIN looks forward to working closely with the RBI on this important initiative,” Alok Misra, CEO & Director MFIN said in a statement.

 

MFIN had developed the CRL to bring differently regulated entities, including NBFC-MFIs, banks, SFBs, NBFCs and non-profit/Section 8 MFIs to agree and adopt a uniform common code for customer conduct and ensure a level-playing field. The CRL has as many as 113 signatories, representing 70 per cent of the market.

“As of now, the sector across various entities provides loans to six crore women, impacting 30 crore individuals in households. Despite this impressive coverage, there is still a huge unmet demand and such uniform regulation across entities will help in sustainable growth of microfinance in India,” MFIN said.

 

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Small retailers breathe easy with MinksPay’s SmartCredit

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In the months following the lockdown, small businesses felt the pinch of lack of adequate working capital. Most of them didn’t have access to formal credit and they had to resort to seeking credit from their distributors/suppliers. The distributors/suppliers which were offering credit to some retailers for a short period also backed out, post lockdown, due to the uncertainty in the market. This further aggravated the working-capital crunch for the retailers, making them resort to such options as term loans from lending platforms or loans from informal sources at high rates of interest. That further cut into their earnings.

This fact was noticed by Sanket Shendure and Sanmati Shendure, entrepreneurs based in Goa, and the promoters of MinksPay. Minkspay had been working with over 10,500 small-scale offline retailers on its ‘SmartIncome’ platform for over 2.5 years before market lockdown started in 2020. Minkspay SmartIncome is a mobile application for offline retailers to sell banking and financial services such as Money transfer, Aadhaar Banking, Micro-ATM, bill payments, prepaid recharges and earn up to 50 per cent additional income each month.

In addition to enabling retailers with SmartIncome, Minkspay was building a solution to cater to the working capital needs of the small retailers and the shutdown scenario created an opportunity to launch SmartCredit. Minkspay also realised that the gap in the actual earnings of small retailers, and their potential earnings had been worsened after the market shutdown.

SmartCredit

MinksPay rolled out SmartCredit in mid-November. This product is aimed at providing small scale retailers with credit against their distributor invoices for up to 30 days. This pre-approved credit limit works like a digital OD or CC facility.

“As a next generation OD/CC facility for the retailers, we not only solve their problem by granting them access to easy and instant credit but also for the lenders as the credit is only used by the retailers for one use case paying off their distributor invoices,” said Sanket Shendure, Co-founder and CEO, MinskPay, talking to BusinessLine.

MinskPay SmartCredit has 1,500 retailers onboarded in Phase-I of the launch. The company aims to onboard 50,000 retailers on SmartCredit by end of this fiscal year and three lakh retailers by end of FY 21-22. This it intends to achieve by partnering with mid-to-large-scale FMCG companies and its distributors across the country.

The company currently has a team size of 28 members spread across Goa and Bengaluru.

According to Sanket, currently there are no competitors trying to enable small scale offline retailers in semi-rural and rural areas with a pre-approved digital credit limit to be used against their distributor invoices.

Funding

MinskPay raised $150,000 from Mumbai Angel Networks in September 2019. In August 2020, it onboarded two industry veterans Prateek Aggarwaal, ex-CBO (Lending), BharatPe, and Ravi Linganuri, ex-Target Retail Group, US as investors-cum-advisors.

MinskPay is in advanced stages of talks for raising $1 million to fund its next stage of growth, added Sanket.

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U GRO Capital sees disbursements at pre-Covid-19 level

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Small business lending fintech platform U GRO Capital has seen its disbursements reach pre-Covid-19 levels but believes that credit demand is still muted.

“We disbursed about ₹120 crore in February and we are now at a little bit more than that,” said Shachindra Nath, Executive Chairman and Managing Director, U GRO Capital, but noted that the credit demand is largely for sustaining existing businesses.

“Borrowers are not thinking about growth too much,” he said in an interaction with BusinessLine.

Also read: U GRO Capital reports Q1 net profit at ₹3.72 crore

U GRO Capital on Wednesday also announced that it has filed an application with the Indian Patent Office for its distinctive methods and systems for modelling scorecards.

“This has allowed the company to penetrate in a highly unstructured segment, which is driven by physical processes,” it said in a statement, adding that it tackles the unavailability of appropriate MSME database, by utilising its unique classification technique leveraging the proprietary knowledge base and strength of statistical models.

Using this model, it aims to target 2.5 lakh small businesses and extend loans on the basis of data analytics amounting to over ₹30,000 crore in the next four financial years.

The company has made disbursals of ₹1,700 crore in the form of secured and unsecured loans till date.

Also read: U GRO Capital appoints Global Value Creation Partners to drive biz growth

The distinctive underwriting model generates credit score cards customised to suit the peculiarities and nuances of varied business enterprises, it said, adding that this is done by analysing the historical loan delinquency patterns and cash flow within each selected business segment.

The proprietary statistical scorecards for assessment at various stages have been developed in consultations with CRIF and Crisil market experts.

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Muthoot Fincorp launches NCDs to raise ₹200 cr

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Muthoot Fincorp, flagship company of Muthoot Pappachan Group (known as Muthoot Blue), on Friday launched its eighth public issue of secured and unsecured redeemable non-convertible debentures (NCDs) to raise ₹200 crore with an option to retain over subscription up to ₹200 crore, aggregating to ₹400 crore.

The funds raised will primarily be used to augment the working capital and requisite lending, said Thomas John Muthoot, Chairman, Muthoot Pappachan Group, and Managing Director, Muthoot Fincorp.

Board approval

The company has received board approval to raise NCDs through public issue in the aggregate amount of up to ₹1,500 crore. The first tranche of the issue with a face value of ₹1,000 each and minimum ticket size of ₹10,000 (10 NCDs), had opened on September 28, 2020 and closed on October 23, 2020.

Also read: Muthoot Finance to raise ₹1,000 crore through NCDs

“The second tranche of the issue with the face value of ₹1,000 and a minimum ticket size of ₹10,000 (10 NCDs) opens now and is scheduled to close on January 25, with an option of early closure or extension in compliance to SEBI debt regulations,” Thomas John Muthoot said.

Demand for gold, MSME loans

There will be nine options with tenure options of 27 months, 38 months and 60 months for the secured NCDs, and a tenure option of 72 months for the unsecured NCDs, offering returns with interest rates ranging from 8.25 per cent to 9.40 per cent. The issue has received credit rating ‘CRISIL A/Stable’ from Crisil.

“Muthoot Fincorp has a diversified portfolio of products that is responsibly designed to empower our customers for their lifecycle needs. In the prevailing market conditions, especially when Indian economy is restarting, we have been experiencing a spike in demand for gold and MSME loans,” Thomas John Muthoot pointed out.

Working capital needs

“In order to enable nano, micro, and small businesses, our target customers, rebound, the company needs the infusion of more working capital and hence the decision to go for an NCD issue. The first tranche was received well by our investors, and we managed to raise ₹397.14 crore,” he said.

Also read: Muthoot Finance to be added to MSCI India domestic index

Muthoot Fincorp, along with sister companies, has lakhs of customers actively engaged with it on a day-to-day basis. “We are confident about the success of this NCD issue, and hope that this will further fuel growth in the economy and add more value to stakeholders, including our investors,” Thomas John Muthoot added.

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Kerala Financial Corporation to lend at 8%, the lowest ever

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The public sector Kerala Financial Corporation has introduced a major interest rate concession for entrepreneurs from the New Year, the latest initiative in a series of stimulus packages and confidence-building measures for the state’s industrial economy recovering from the disasters of year 2020.

New loans will be made available at a base rate of eight per cent, which is the lowest yet declared by the Corporation, an official spokesman said here. The Corporation has also announced that special loans of ₹1,600 crore would be disbursed during the next three months.

Special loans

No prior licences or permits are required in order to access the loans, the spokesman quoted Tomin J Thachankary, Chairman and Managing Director of the Corporation, as saying. The loan will be issued merely on the basis of a project report, and without detailed inspections. Applicants need to produce licences within a period of three years.

They would no longer have to appear in person at the office either, which would help prevent any delay in the issue of the loans. A quick decision would be made on the disbursal after applicants complete an interview with top officials of the Corporation at the headquarters via video conference.

Security reduced by half

The requirement of security, which used to be twice the amount of the loan, has been reduced to half now. For example, if the security requirement was ₹1 crore to take a contractor loan hitherto, it would be just ₹50 lakh now. No other financial institution is as generous, the spokesman quoted Thachankary as saying.

Entrepreneurs had been enjoying a facility to convert interest arrears into loans as part of Covid relief schemes. The one-time settlement that saw enhanced interest from entrepreneurs and increased repayments, ended on December 31 with recoveries of ₹150 crore. In addition, the Corporation has made a financial profit by disposing of 58 delinquent items it had attached.

Uploading of credit information

With details of defaulters being uploaded on the CIBIL database, recoveries have showed a sharp uptrend. Defaulter details are now being uploaded even in other credit information companies such as CRIF, Experian and Equifax as well. This would serve as a warning for those who do not pay up intentionally.

Meanwhile, loans of up to ₹5 lakh are available for old passenger buses for converting into CNG or electrical transmission depending on the number of cylinders. New rules require that buses plying in the cities of Thiruvananthapuram, Ernakulam and Kozhikode must convert, if older than 15 years. Repayments would need to be effected on a weekly basis.

According to the spokesman, the loan amount would be paid directly to the conversion company after receipt of fitness certificate from the State Department of Motor Vehicles. The scheme would benefit thousands of buses operating in the listed three main cities of the State, he added.

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