Tag: LendingKart

‘CFOs should keep eye on long-term strategy, adapt to short-term situations’, BFSI News, ET BFSI

Personal Finance

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CFOs have to play a major role during the pandemic in their organisations and be ready from the technology and business perspectives.

All eyes are on the P&L projections and the growth expectations from the businesses. With various factors that have come out of the pandemic, I would imagine that CFOs are at the centre with all the strategies that organizations are playing right now, Sudeep Bhatia, Group CFO, Lendingkart, said at the panel discussion CFOs’ View: Building Pandemic-Proof Balance Sheet at ETBFSI Summit.

'CFOs should keep eye on long-term strategy, adapt to short-term situations'

“For CFOs, the major focus has moved more towards a strategist, acting as a catalyst. How you can adapt to every day. Making sure you are ready from a technology and business perspective,” Upma Goel, CFO, Ujjivan Small Finance Bank, said.

'CFOs should keep eye on long-term strategy, adapt to short-term situations'

Adapting to new normal

Niraj Shah, CFO, HDFC Life said in these times, flexibility and agility is something that comes to the fore, and that’s something that a CFO needs to prepare the organization for.

Investing ahead of the time, and being agile, to try and adapt to the changing customer preferences because of the changing environment, he said.

'CFOs should keep eye on long-term strategy, adapt to short-term situations'

The RBI and GOI have taken multiple steps and interventions with every step, and, therefore, all the financial institutions, and all other organizations as well, had to adapt to the situations very fast, Bhatia of Lendingkart said.

Every business will be affected in a different way. Given the situation, and we adjust to that, but just in principle it’s about keeping sights on your long-term strategy, at the same time, adapting, to the short-term situations, Shah said.

Emphasising the need to have a fine balance to make effective use of the liquid cash, Goel of Ujjivan SFB said, “We cannot afford at this point of time not to have the liquidity and wait for the real demand. Demand has started picking up”

The challenges

The Covid pandemic has been the most serious challenge to financial institutions in nearly a century and CFOs need to maintain our distribution and recovery channels open, despite the social distancing advice by the supervisory and compliance function, said G S Agarwal, CFO, Shriram Housing Finance.

'CFOs should keep eye on long-term strategy, adapt to short-term situations'

‘The struggle to manage between these things and keep your balance sheet and P&L intact has been the biggest challenge. Also, to do the compliances remotely sitting remotely without any paperwork, without any physical signatures has been quite challenging, he said.

Customer requests and expectations have grown multifold. “I haven’t seen this kind of customer engagement before even from the existing customer base. This is because they need support from the organization as well,” Bhatia of Lendingkart said.



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Upcoming IPOs in start-up ecosystem have high valuations, says India Quotient’s Gagan Goyal

Banking & Finance

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Bharat-focused venture capital firm, India Quotient, has been an active investor in fintech start-ups, particularly in the lending space. Some of its portfolio companies include LendingKart, LoanTap, Pagarbook, Sharechat, and Sugar. LendingKart is a direct competitor to the SME (small and medium enterprises) lending vertical of fintech unicorns ($1 billion valuation), Paytm and MobiKwik. Both the billion-dollar valued companies have filed papers for public listings this year. BusinessLine spoke to India Quotient’s General Partner, Gagan Goyal, on how these two IPOs might impact SME lending start-ups in India and India Quotient’s fourth fund.

How do you think IPOs of Paytm and MobiKwik will impact the SME lending business?

In lending, the biggest raw material is the money that you loan to the end-user, and your ability to raise this capital for lending. From that perspective, the companies which are profitable are in a better position to source money at a very low cost. Typically, lending tech companies borrow from NBFCs or banks at a high cost of capital. But, once the company becomes profitable and opts for a public listing, it is possible for it to secure low-cost capital. Now, I cannot comment on whether Paytm and MobiKwik will be able to do that. But the chances are bright for companies like LendingKart to remain competitive.

Given that both MobiKwik and Paytm have an established network of SMEs, do they have an advantage over other existing SME lending companies in terms of low acquisition costs?

There are definitely advantages in terms of customer acquisition cost, but the game of lending is not about being able to acquire a customer. The crucial part of the lending business is to underwrite customers and determine if the company can give them a loan, as it’s a book-building business. People who are creditworthy have many options to get loans from multiple sources, they can go to the bank and ten other places. But in SME lending, companies have to find a customer who is creditworthy, and at the same time does not have a high CIBIL score. Someone whom they can underwrite and still expect to make money from by giving him a loan and recovering that. Paytm and MobiKwik have an advantage because they have a large base, but there are ten more things in lending which are more important.

Does that mean it is important to have low NPAs (non-performing assets) in SME lending?

You can run a high NPA business in lending too; banks typically have a 2 per cent NPA. I think it is about finding the right spot, between the borrowing cost of capital and lending interest rate so that one is able to recover the cash, cover operation costs and also make profits.

What is the update on India Quotient’s fourth fund?

Initially, in January, we aimed to raise $80 million for our fourth fund and we received a great response from domestic HNI capital. We were able to announce our first close at $64 million last month. Depending on the response we get from institutional investors, we might increase our target corpus from $80 million to $100 million. Till now, we have committed four deals from our fourth fund. We don’t usually invest in US copycat businesses because they are largely capital-driven. We look for ideas that are in the early stage and are backed by the unique market insights of the founder or their product-building ability because that is an important factor for building a successful business. The average ticket size of India Quotient’s investments is $250K to $1 million.

The Indian start-up ecosystem is looking at about five IPOs this year. Do you think these companies will be able to maintain their valuations in the public market?

I cannot exactly predict whether these companies will be able to maintain the valuations, but we all know that their current valuations are very high. There’s no doubt about it. People tend to see future value and so they are okay to pay a premium, but the real judgement will come when these companies get listed. I am also curious to see how that shapes up, but it is true that these companies are highly valued and they have to pass the test.

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Lendingkart’s NBFC arm raises ₹108 crore from Dutch bank FMO

Banking & Finance

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Lendingkart, a financial services and fintech start-up, announced a new round of fund raising of $15 million (₹108 crore) in debt funding from FMO, the Dutch entrepreneurial development bank. With this deal, Lendingkart strengthens its three-year relationship with the bank, having received funds through NCDs (non-convertible debentures) and increasing its cumulative exposure to $19 million with this transaction.

FMO supports sustainable private sector growth in developing countries and emerging markets. This new influx of funds to Lendingkart will be utilised towards expanding the reach of financial products to the MSME segment through Lendingkart’s digital platform across 100 sub-industries spread across India.

Lendingkart to launch ‘credit intelligence services’ for banks

Lendingkart Group is a leading Fintech company in India, providing short-term working capital loans to SME borrowers under Lendingkart Finance Limited — a non-deposit taking NBFC arm of Lendingkart Group. Founded in 2014 by Harshvardhan Lunia, Lendingkart has evaluated nearly half a million applications, disbursing 1,00,000+ loans to more than 91,000 MSMEs in 1300+ cities across all 29 States and Union Territories of the nation, making it the NBFC with the largest geographical footprint in the country.

Focus on women entrepreneurs

The Group which has received an equity infusion of ₹1,050 crore to date, is financed by reputed international investors like Fullerton Financial Holding (FFH) (100 per cent subsidiary of Singapore Sovereign Fund Temasek Holdings), Saama Capital, Mayfield India, Bertelsmann, Sistema Asia and India Quotient. The Group had received an equity infusion of ₹319 crore in FY 2021.

Lendingkart ramps up headcount, promotes high performers

“We raised ₹1,800 crore in debt funding last fiscal. To support our growth plans we plan to raise a further ₹3,000 crore in debt funding from PSU and Private Banks, Small Banks, NBFCs, AIFs, HNIs and Overseas Funds. We are targeting 40 per cent growth over the pre-Covid year, this fiscal. We closed last fiscal with ₹30 crore in profits and sustained this till December 2020 despite the pandemic. With this new fund raise, Lendingkart will fast-track its efforts to improve financial inclusion and credit reach to 5,000 + new MSMEs with a focus on small businesses and women entrepreneurs,” Sudeep Bhatia, Lendingkart Group CFO, told BusinessLine. By FY 22, Lendingkart has planned to onboard 1.25 lakh MSMEs on its portfolio.

“Lendingkart Finance is a fast-evolving company and has become a leader in the fintech space in India. The new transaction is aligned to FMO’s ambition to accelerate financial inclusion through innovative technological solutions. As India recovers from the pandemic and uncertainties presented by it, we are pleased we can partner with Lendingkart to better support its customers, with a focus towards women-run businesses and micro enterprises” said Huib-Jan de Ruijter, Chief Investment Officer (a.i.), FMO.

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Lendingkart to launch ‘credit intelligence services’ for banks

Banking & Finance

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Lendingkart, a digital lending fintech start-up in working capital space, plans to launch ‘credit intelligence services’ for banks from April, helping them evaluate credit worthiness of self-employed small- and micro-enterprises based on their cash flows, said its co-founder and Managing Director, Harshvardhan Lunia.

Lendingkart will assign a probability of default score, give out a risk premium and suggest the amount that banks could lend to such small and micro enterprises, especially those in Tier-2 and Tier-3 cities, Lunia told BusinessLine.

 

Banks could always go with their own underwriting model and use the score provided by Lendingkart as an additional tool to evaluate the borrower, he said.

Lendingkart is the only fintech in the country that has built an algorithm-based and cash flow based decision engine, he said.

The use of the cash flow based decision engine would obviate the need for institutions and banks to rely on financial statements and income tax returns (ITRs) to evaluate a borrower.

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