Credit and Finance for MSMEs: Online non-banking economic organization (NBFC) LoanTap is targeting to disburse Rs 1,000 crore loans in the economic year 2021-22 up from more than Rs 600 crore so far along with onboarding more than 82,000 fresh prospects, CEO and Co-founder Satyam Kumar told TheSpuzz Online. The digital lending startup, which presents organization loans, private loans, and so forth., and had tied up with Bank of Maharashtra in February this year for co-lending to MSMEs, had a default price of significantly less than 1 per cent prior to Covid which inched up to 2 per cent in terms of days previous due post-pandemic. LoanTap has raised more than Rs 170 crore in funding so far from investors which includes 3one4 Capital, India Quotient, Shunwei Capital, Avana Capital, Kae Capital, and so forth.
“We have maintained a cash-positive balance sheet since our inception in 2016. We were able to manage and keep our cash burn very low which eventually helped us to achieve our targets. Till date, we have disbursed over Rs 600 crore of funds across 35000+ customers. Money is a raw material for us and therefore we aim to raise debt-and-equity rounds to create a larger loan book that can cater to more customers, especially in untapped markets,” stated Kumar.
To provide relief to enterprises and folks impacted due to the pandemic last year, the Reserve Bank of India had in March permitted lending institutions to provide a moratorium on installments of term loans due amongst March 1 and May 31, 2020. The period was additional extended till August 31, 2020. RBI had also permitted banks to undertake one-time loan restructuring of specific categories of loan accounts facing Covid tension without having classifying them as NPAs.
“Restructuring should have been announced from the beginning as most of the people were having money to repay back but they were not sure about the future situation as to how their cash flow will stack up. The industry was running at 27-40 per cent of moratorium whereas we were running at 11 per cent of moratorium. We are able to manage credit loss of about 5 per cent,” added Kumar.
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The on-line lending industry has been below the RBI and government scanner for some time to crack down on fraud Chinese lending apps operating in India. Following the ban on more than 250 apps of Chinese origin ranging across categories such as social network, gaming, e-commerce, news, organization, photo, and video editing, and more, the government had last month blocked 27 lending apps below Section 69A of the Information Technology Act, 2000.
In a circular dated June 24, 2020, RBI had reiterated to banks and NBFCs to disclose names of digital lending platforms engaged as agents on the site when lending platforms have been essential to disclose upfront the name of the lending institution on whose behalf they are lending. Further, a press release was also issued on December 23, 2020, cautioning folks against unauthorised digital lending platforms with an appeal to confirm the antecedents of the service provider. The central bank had also constituted a Working Group on January 13, 2021, to study all elements of digital lending activities which includes lending via on-line platforms and mobile apps by RBI regulated and unregulated entities. The group had to also come out with suggestions pertaining to regulatory and consumer protection measures.