Lendingkart: Loans disbursed to MSMEs up 150% year-on-year in FY22

Credit and financing for MSMEs: Loan disbursements on MSME-focused digital lending platform Lendingkart in fiscal 2021-22 surpassed pre-Covid levels after posting a 54 percent growth decline in FY21 amid the pandemic from FY20. According to data shared with Financial Express Online, Lendingkart had facilitated the disbursement of Rs.2,747 crore unsecured loans in the last fiscal year, up 150 percent from the disbursements of Rs.1,098 crore and 16 percent in FY21 versus the loans of Rs.2,365 crore equivalent in FY20. Total disbursements since the company’s inception in FY 2015 has been around Rs.9,108 crore to around 1.70 lakh MSMEs from over 15 lakh loan applications received over eight years. Additionally, Lendingkart’s gross revenues increased by 32 per cent to Rs.6.75 crore in FY22 from Rs.5.11 crore in FY21 and up 39 per cent from Rs.4.85 crore in FY2020.

“In contrast to large companies and corporations, MSMEs were poor in capital for the longest time. India would need to further facilitate access to affordable credit for MSMEs if it is to achieve the US$5 trillion economic vision. The government’s focus on MSMEs is already visible and hence we are seeing such growth in lending to MSMEs on our platform. Additionally, digital lending has closed a significant gap in credit availability for small businesses,” Harshvardhan Lunia, co-founder and CEO of Lendingkart told Financial Express Online.

The credit gap is essentially the difference between the total credit supply from formal channels in the country and the addressable demand, which is currently huge in the country’s MSME sector. The International Finance Corporation (IFC) had estimated the addressable credit gap of MSMEs at around Rs.25.8 crore in November 2018. 20-25 lakhcrore.

Among the total payouts in FY22, the co-lending model the company adopted in FY20 made up a decent chunk. According to Lunia, over Rs 1,000 crore (36 per cent) of loans have been disbursed to MSMEs through co-lending, compared to Rs 260 crore in FY21 and Rs 160 crore in FY20. The company has loans already approved in the current fiscal year Rs 3,000 crore. The volume of MSME co-lending loans has also increased from around 5,000 in FY21 to around 20,000 in FY22, for a total of around 30,000 loans since FY20.

“Co-lending has grown in importance as co-lending also helps lenders speed up the lending process. While banks can digitally connect with borrowers, underwrite them, and manage customer retention and experience for all types of loans, it still takes time. Also, RBI wants the co-lending model to be adopted,” Lunia added.

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The RBI had announced the Co-Origination Framework for loans from banks and non-bank financial corporations (NBFCs) for senior sector loans in November 2018, which was renamed the Co-Lending Model in November 2020. Under co-lending, the risk is split 80:20, 80 percent loan with the bank and at least 20 percent with NBFC.

Lendingkart launched its co-lending Software-as-a-Service (SaaS) platform Lendingkart 2gthr in November 2020 to allow lenders to integrate the platform. The company had formed partnerships with lenders such as Bank of Maharashtra, Punjab National Bank, Canara Bank and others under the co-lending model. It has a total of 21 lending partners so far, 15 of which are live on the platform.

Lunia said the company is adding 6,000 to 7,000 new MSMEs monthly and disbursing loans of around Rs 300 billion each month. “Month-month growth in total payouts is around 27 percent, while customer base growth is around 10 percent,” he added.

70 percent of Lendingkart’s customers come from Tier II cities and beyond. The platform facilitates loans up to Rs 1 crore with an average loan size of Rs 6-7 lakh through its cash flow based underwriting model cred8. Regarding the loan default rate, Lunia said less than 0.02 percent of borrowers default on loans.

Lendingkart expects to disburse 60,000-70,000 loans of Rs 4,000-5,000 in FY23. Lendingkart has so far raised around Rs 1,050 crore in equity funding from international investors including Fullerton Financial Holding (subsidiary of Singapore Sovereign Fund Temasek Holdings), Bertelsmann, Mayfield India, Saama Capital, Sistema Asia, India Quotient and others. “We also have plans for funding in the second half of the year,” Lunia added.

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