Fintech firm Indifi raises Rs 290 cr in funding round by ICICI Securities

Indifi Technologies, an MSME (Micro, Small and Medium Enterprise) lending platform, has secured Rs 290 crore in Series E financing led by ICICI Securities. Existing investors British International Investment, OP Finnfund Global Impact Fund, Omidyar Network India, Flourish Ventures and CX Partners also participated in the latest investment round.

The Gurgaon-based company plans to expand its operations and expand access to working capital for small businesses. “The primary use of the funds will be in growth; in terms of customer service over the next two years. There will be investments in new products, and in technology to ensure improved operating cost efficiency and risk differentiation,” said Alok Mittal, Chief Executive Officer (CEO) and co-founder of Indifi. .

Founded by Mittal and Siddharth Mahanot in 2015, Indifi has more than Rs 1,500 crore assets under management (AUM) and converted to earnings in February 2022.

Endive said it has distributed more than 73,000 loans worth more than Rs 4,100 crore in 400 Indian cities. “Most of our business includes micro and small scale (enterprises) and the turnover of the company’s borrowers is usually in the range of Rs 30-40,000 to Rs 10 crore per annum. This funding round will give us the capacity to deploy another Rs 4,000 crore in the market over the next two years,” he said. metal.

The company plans to launch more transaction-based financing products such as MSME cards and supply chain financing in the next six to twelve months. It has been scouting new segments of borrowers and extending credit to D2C brands and software companies in the past six months. “We are calibrating (the company’s) expansion to the point of digitization in the country. Mittal pointed out that since different sectors of borrowers are going through waves of digitization, (we) make these credit facilities available to them on an ongoing basis.”

Nearly 2 crore MSMEs have registered themselves on the Udyam portal, a registration platform of the Ministry of MSMEs.

More than 17 lakh small enterprises that benefited from credit under the Center’s Emergency Credit Line Guarantee Scheme (ECLGS) have collapsed and turned into non-performing assets (NPAs) as of March 2023, according to media reports.

“One of the basic problems in MSME lending is late payments or bad loans, which is why formal credit (channels) serve 15 percent of the market while 85 percent is still underserved,” said Mittal. “One of the key things required in a model like ours is to build models that can distinguish risks well.”

He explained that the company has customized its credit models with industry-specific overlays to distinguish between risks associated with different industries. It operates a complete risk infrastructure that includes underwriting and loan account monitoring and has its own staff to collect loans.

He added, “I don’t think ECLGS affects normality for NPAs in general in the MSME industry but nonetheless the improvements required in underwriting are important for reasons of implication and this is where our credit models come in.”

The Reserve Bank of India (RBI) on June 8 announced its approval of the First Loss Guarantee Framework (FLDG), a credit risk-sharing agreement where up to 5 percent of the default loan portfolio of banks and non-bank financial firms (registered entities) is guaranteed by A third party such as a fintech or a lending service provider (LSP).

“This is a huge development in the interest of the market, for innovation around fintech products. With younger players entering the market who don’t have a proven track record, having a default guarantee of loss offers them an easy way to get started and working with banks and non-bank financial firms to be able to support this Innovation Mittal said, “All of Indifi’s lender relationships are without first default loss guarantee as we have demonstrated the risk performance of banks and non-bank financial companies.”