The Richest NBFC Startup in a $300B Indian SME Loan Market
It became most famous as the startup that secured the highest ever round of seed funding when it raised 100 crores from marquee investors that included KKR India’s CEO, Sanjay Nayar; former CIO of HDFC Bank, Anil Jaggia and former head of operations and technology at Citibank, Vikram Sud.
Flexiloans.com was started in April 2016 by Abhishek Kothari, Deepak Jain, Manish Lunia and Ritesh Jain 4 batch mates of ISB, class of 2009. They are solving the problem of ‘Jaan-Pehchaan’ based social borrowing in the SME segment.
The startup gets more than 3000 applications and disburses around 20 crore every month. Manish Lunia, cofounder of FLexiloans.com, discusses how they plan to disburse even more loans in more cities, to more SMEs with faster approval times with the use of technology.
How many loans have been processed so far and what is value of loans disbursed?
We have digitally processed more than 10,000 applications till date with an average ticket size of rupees 5 lakh. We are too early in our journey to discuss book size.
What is the interest rate on the platform? How is the rate decided?
The interest rates on our platform start from 15% p.a. and are dependent on factors put in by our credit algorithms based on risk and business parameters
How does FlexiLoan generate revenue?
We have two primary sources of revenue. One is the loan processing fee that we generate for all loans originated on our platform and the other is the interest income that our NBFC generates for the loans disbursed.
How does FlexiLoan vet credit worthiness of a borrower?
FlexiLoans uses a vast base of financial, demographic, social, psychological, historical loan track records and surrogate information on networth and product quality, to evaluate the overall creditworthiness of a borrower. A lot of these information is sought from independent sources.
How does FlexiLoan deal with write-offs?
We follow standard policy based processes followed by NBFCs for loan provisioning. We have deployed strong early warning systems and legal mechanisms to take care of delinquent cases.
Tell us about your recent acquisition of CreditPeriod.com. Are you looking to acquire more?
The acquisition of CreditPeriod.com was done in order to strengthen our position in supply chain financing for the SME ecosystem which is still in its early adopter phase. The acquisition forms a crucial part of our exercise to digitize end-to-end supply chain finance vertical for SMEs.
We will continue to acquire companies who can accelerate our go to market plans by providing extendable technologies as well as the right talent to join us.
With large e-wallets and traditional banks also going into online lending how will FlexiLoan operate in the future?
FlexiLoans is currently serving the need of getting loans fast (we approve loans within 48 hours), hassle-free (we strive for less documentation) and from anywhere the borrower may be based in India. The country has over 50 million SMEs and they contribute around 45 percent to the national GDP but not more than 10 percent are serviced by traditional banks till date. There is a huge opportunity in excess of 300 billion dollars waiting to be serviced and FlexiLoans is creating a niche with its model that combines differentiated credit underwriting, efficient technology IP and data science models.
We currently lend to SMEs in over 70 cities and our aim is to dramatically increase our distribution to more than 500 cities with an average processing time of less than 24 hours.
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