Lendingkart Group’s finance division has now raised Rs. 50 crore in debt from Yes Bank Ltd, indicating that it has started shifting to banks for loans instead of non-banking financial companies (NBFCs) as the lending rate of the latter is higher.

Lendingkart Group which is a financial technology start-up that has two sub-divisions. The first is Lendingkart Technologies Pvt Ltd which has built technology software to analyse credit risk and the second is Lendingkart Finance Ltd which underwrites the loans. The Yes Bank funds were raised by the Finance division.

Harshvardhan Lunia, the CEO and co-founder of Lendingkart said,

Large NBFCs are in similar business as us. For banks, they want to see a lot more cycles in your business. It is a gradual progression from NBFCs to banks. All large NBFCs anyway borrow from banks. It is a natural progression to move more and more towards banks. Certainly, NBFCs cannot lend below a certain rate because for themselves, the cost of fund is high

The company was founded in 2014 by Lunia and Mukun Sachan with the aim to help entrepreneurs and small businesses with Working Capital Finance by using analytics and big data scoring to evaluate the client’s business.

Lendingkart has gone trough several rounds of raising funds, the most recent one raised an undisclosed debt amount from DCB Bank Ltd. The company has previously accumulated about Rs. 250 crore from DCB and Yes Bank and several NBFCs including IMFR Capital Finance Pvt. Ltd, Hinduja Leyland Finance Ltd, Caspian Impact Investments Pvt. Ltd, Mannapuram Finance Ltd and Sundaram Finance Ltd.

Additionally, Lendingkart has also raised $20 million in equity with another $12 million in debt from a funding round led by German giant Bertelsmann Indian Investments in which companies such as Darrin Capital Management, Saama Capital, and India Quotient participated.

Lendingkart lends money from the company’s books instead of connecting borrowers with financial institutions. After the company borrows from banks and NBFCs at a specific rate, it lends to small businesses at an interest rate that ranges between 16-24%.

Since its inception in 2014, the company claims to have lent loans in 650 cities and to businesses in 23 sectors including computers, mobiles and accessories, FMCGs, and textile and industry supplies.

Commenting on this, Lunia said,

The marketplace business (connecting banks or NBFC to borrowers) has scale limitations. Borrowers expect instant loans. But, if you don’t have your own NBFC, that expectation might not be met every time. The loans might or might not happen, or they may not happen in the time-frame required by the customer

Since lending is our main business, money is working capital for us. We use the equity money for two things. One is build technology, analytics and infrastructure. Second, the equity gives our lenders a comfort that if anything goes wrong in the lending business, we have the appetite to absorb it

Lendingkart’s main competition comes from Capital Float, Instakash Technologies Pvt Ltd, Neogrowth Credit Pvt Ltd and IndiaLends, all of which have raised substantial amounts of funding in May last year.

In the last quarter of 2016, Lendingkart acqui-hired KountMoney, an online loan marketplace in order to enhance its tech and data analytics capabilities.

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