The Gurgaon-based company plans to expand its operations and expand small businesses’ access to working capital. “The core use of the funds will be in growth; in terms of serving customers over the next couple of years. There will be investments in new products, and in technology to ensure we improve the operating cost efficiency and risk discrimination,” said Alok Mittal, Indifi’s chief executive officer (CEO) and co-founder.
Indifi said it has disbursed over 73,000 loans worth more than Rs 4,100 crore in 400 Indian cities. “Most of our business involves micro and small (enterprises), and the turnover of the firm’s borrowers is typically between Rs 30-40 lakhs to Rs 10 crore per year. This funding round will give us the ability to deploy another Rs 4,000 crore in the market over the next couple of years,” said Mittal.
Close to 2 crore MSMEs have registered themselves on the Udyam portal, a registration platform under the MSME ministry.
“One of the core problems in MSME lending is delinquencies or bad loans, and that is why formal credit (channels) serve 15 per cent of the market whereas 85 per cent remains underserved. One of the key things required in a model like ours is to build models that can discriminate risks well,” said Mittal.
“I don’t think ECLGS affects the normal state of NPAs overall in the MSME industry but nevertheless improvements required in the underwriting are important for inclusion reasons and that is where our credit models are coming in,” he added.
“This is a great development in the interest of the market, in the interest of innovation around fintech products. As younger players enter the market who do not have a proven track record, having a loss default guarantee provides them with an easy way to get started and work with banks and NBFCs to be able to support that innovation. All the lender relationships on Indifi are without a first default loss guarantee as we have demonstrated risk performance to banks and NBFCs,” said Mittal.