Lendingkart to offer its credit risk analytics software to financial institutions

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New Delhi: Lendingkart, an online lender to small and medium enterprises (SMEs), will offer its credit risk analytics software as a service for other financial institutions in 2017, and aim to double its reach in the next six months, a top company executive said.

“We plan to offer our analytics technology to other NBFCs (non-banking financial companies) and financial institutions sometime in 2017,” said Lendingkart’s co-founder Harshvardhan Lunia in a telephonic interview.

“We aim to increase our reach across various credit product, geography and customer segments by monetizing our data analytics and credit scoring platform, which other lenders can use to evaluate the credit worthiness of the borrowers…Also, it will help us to disburse more loans without increasing our book size thus, increasing returns of assets for us,” Lunia added in an email response.

Since its inception in 2014, the online NBFC, Lendingkart Finance Ltd has disbursed 7,000 loans to SMEs in over 450 cities. The company expects this number to cross 10,000 covering over 800 cities in next six months.

Lendingkart Finance and Lendingkart Technologies Pvt. Ltd are part of the Lendingkart Group. Lendingkart Technologies has built analytics software to evaluate borrowers’ credit worthiness.

Founded by Lunia and Mukul Sachan, Lendingkart underwrites working capital loans online to SMEs, which have an annual turnover of Rs12 lakh to Rs1-1.5 crore. On an average, these SMEs are lent Rs5.5-6 lakh at an annualized interest rate ranging between 16% to 24%, for a duration of six to 12 months. Lendingkart claims to have a loan application approval rate of 22-23%.

The credit risk analytics technology analyses the borrower or an SME on the basis of over 2200 variables and data points, which includes industry type, business cash-flows and transactions, income tax return filings of the business, its previous loan and repayment records, among others. This is the technology that Lendingkart plans to share with other financial institutions.

Lunia explains there are two possible ways in which it could monetize this service. “Using our (risk analytics) technology, we could co-lend with other financial institution in cases where SMEs have larger (capital) needs. The other way is that we charge (the financial institutions) for using our technology,” he said. However, Lunia added that it is too soon to forecast how much revenue Lendingkart will earn from its technology.

Lendingkart, which has 350 employees across offices in Ahmedabad, Bengaluru and Mumbai, has raised over $40 million from Betelsmann India Investment, Darrin Capital Management and Mayfield India, among other investors. The fintech company competes with Bengaluru-based Capital Float (Zen Lefin Pvt. Ltd), Instakash Technlogies Pvt. Ltd, Neogrowth Credit Pvt. Ltd, IndiaLends (GC Web Ventures Pvt. Ltd), among others.

In May, Capital Float raised $25 million (Rs170 crore) in an investment round led by US-based Creation Investments. In August, Mumbai-based NeoGrowth raised Rs15 crore from Frontier Investments Group and IndiaLends raised about Rs6.5 crore from DSG Consumer Partners, Siddharth Parekh and other angel investors.