In an interview with
ETCFO’s Shivani Phaugat, Sudeep Bhatia, Group CFO, Lendingkart Technologies Private Limited talked about the coronavirus’ impact on its lending segments, Reserve Bank of India’s relief measures and policy reforms for the industry.Lendingkart Technologies Private Limited is a fintech startup in the working capital space. The company has developed technology tools based on big data analysis which facilitates lenders to evaluate borrower’s credit worthiness and provides other related services.
Q: What has been the impact of coronavirus on your business and how is the demand for credit?
Sudeep Bhatia: Given that countries around the globe, including India, have implemented a complete lockdown barring essential services, currently the businesses are unable to seek loans through personal visits to bank branches and hence digital lending firms have a clear opportunity. However, considering the current rapidly evolving situation all financial institutions are focused on maintaining their liquidity and collections.
However, considering that China was able to mitigate the pandemic in about 10 weeks, we are hopeful that it’s going to be a 3-4 months problem in an optimistic sense. Once things start getting back to normal, there is bound to be a significant market opportunity for all lenders in MSME space.
Lendingkart sources business from diversified channels, including online platforms, strategic partners, DSAs, anchor-based supply chain models and so forth. We are continuing to get business leads from digital channel partners and small businesses applying for credit on our website which is approximately 70% of our total sourcing.
For the time being, we have decided to hold until outrage of the pandemic is known but our technology platform-based credit assessment is on and we are accumulating this business for later as soon as the world is ready to restart over next 3-4 weeks.
Q: Which of your segments are a hit and a miss amidst the virus outbreak?
Sudeep Bhatia: Government has ensured that essential services, like banking, foods, household consumer goods, dairy products, delivery services, groceries, pharmacies, etc, remain fully functional and our business in these segments is thus not affected. However, we remain cautious on hardware products, auto component suppliers, travel and any other non-essential services until the lockdown.
Q: What is your take on the RBI’s relief measures? How would this impact your lending operations?
Sudeep Bhatia: It is really great to see the Government and the RBI taking proactive measures to mitigate the burden of debt servicing brought about by coronavirus pandemic. Our board has also taken steps to approve the moratorium policy to support our customers and we are closely monitoring to pass on this benefit to all eligible borrowers.
In terms of impact, this means an additional 3 month of interest on the same portfolio and it may create additional pressure on the central treasury in terms of business liquidity. Most of our lending partners have also come forward to support the moratorium while some are still forming their board approved policies.
Q: Any immediate policy reforms that need to be addressed for your industry?
Sudeep Bhatia: While the current relief measures pertain to banking sector regulated by the RBI, it will be great to bring Stock Exchange to take similar relief measures to encourage Capital market participants to provide support and relief to corporate entities which is a much required step that will go a long way in supporting relief measures intended by the government.