Lending to small and medium enterprises (SMEs), Lendingkart Technologies expects to clock up to Rs 1,600 crore in disbursals this fiscal. The NBFC’s co-founder and chief executive officer, Harshvardhan Lunia, told Shritama Bose that the company is location-agnostic and will be happy to lend to any small business as long as it is eligible. Edited excerpts:
What was the business like in FY17?
Last year, we disbursed loans of around Rs 400-odd crore. We had started the year with only Rs 100-odd crore. We have grown almost four times compared to FY16 and this year, the plans are to repeat that kind of growth.
What is the average size of the loan disbursed?
Ninety percent of our loans would be in the Rs 50,000 to Rs10 lakh bracket.
What are your sources of capital?
We’ve raised some equity and we’ve leveraged our books with borrowings from others as well — from banks, other large NBFCs, financial institutions, development institutions and others of the sort.
What would your capital requirement be for FY18?
We are looking to raise debt of somewhere around Rs 400-450 crore.
What kind of spread do you normally target?
Our margins depend on the credit risk associated with the borrower. Depending on the data-based profile that we create, we price the loan.
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What is the role of technology?
We have digitised all the operations. We don’t have physical infrastructure for anything. All our customers come online and apply on our website. Before giving the sanction for a loan to that guy, we don’t take any physical document from him. Post that, the agreement is worked out. That is the origination piece. Then we have evaluation. We use machine learning or AI (artificial intelligence)-based systems. We have our proprietary systems. For smaller loans, the borrower does not necessarily have financial statements or income tax returns. We have to work with their transaction data, banking data, their ecosystem data, which we normally call proxies for creditworthiness and evaluate these guys.
How do you approach your borrowers?
There are two-three ways of doing it. One would consist of social media marketing, email and SMS campaigns and stuff like that. The second is through strategic partnerships, where we tie up with principals like StoreKing, Flipkart and other online sellers. In the offline space, it’s through last-mile service providers for traders. The third is the conventional source — chartered accountants, financial intermediaries and online platforms such as PaisaBazaar or BankBazaar.
What would be the turnover of your average borrower?
These are normally businesses earning between Rs1 lakh a month and Rs20 lakh a month.
On a yearly basis, turnovers would be between Rs12 lakh and Rs2 crore. These are actually micro entrepreneurs.
What is the procedure for determining pricing?
Our system will generate a score for each applicant and there will be a classification into low, high or medium. The score is generated on the basis of the quantum and quality of data that he has given us. Based on the classification, a rate range is given to us by the system and we price the guy within that range.
How many locations have you reached so far?
We are present in more than 650 cities and small towns.
Would you like to expand beyond these?
We are location-agnostic. These are places where people applied to us from. Tomorrow, if people from another 1,000 cities apply to us, we’ll be happy to give them loans. We are not constrained by our physical presence.
Would you have a disbursal target for FY18?
That would be around Rs1,500-Rs1,600 crore.