FLOATING ON LENDING CAPITAL

Capital Float is the online version of the Non-Banking Financial Company (NBFC), Zen Lefin Private Limited. The company lends on a co-lending basis with partnerships across many verticals. The quick turnaround plus partnerships across verticals is what th

What is the customer strength and disbursal in FY2017?

In FY 2017, our disbursals were around Rs1, 500 crore. We have 10,000 SMEs as customers on our books. From this base, we are targeting a 3 times growth in the current fiscal in our client base. The disbursals target is Rs 5,000 crore.

The aggressive benchmarking is a reflection of the size of the overall opportunity and our target market specifically.

What is the loan basket break-up in terms of categories and tenures?

Our focus is the unbanked and those not getting proper loan products from the traditional lending system, for which we have five products.

First is one-year working capital loans or lines of credit to digital merchant businesses, where we see 95 per cent renewal. Next is assetbacked term loans to manufacturers with a brick-andmortar setup, between Rs 8-20 lakh with a 2-3 year tenure. Both are 30-40 per cent apiece of our total basket.

We have merchant cash advances, largely to restaurants and retailers, based on POS billing data. Here the tenure is 90 days and size is Rs 6-10 lakh. Fourth is taxi loans, primarily to facilitate drivers who want to work with services like Ola and Uber. Both of these are 10-12 per cent each of the portfolio.

Last product is micro loans to kirana stores which are of a 3-6 month tenure and Rs 50,000 in size. This revolving credit helps the store owner scale up business because it is used multiple times.

We work in a data-generating ecosystem – Amazon, Uber, Paytm, Oxigen, Itzcash– which helps us to analyse better and serve customers better in all our categories. With this approach, our growth path is very clear. We aim to have acquired 1 million customers by 2020-21 and a disbursement of USD 1 billion. We are excited about the merchant cash advances and the kirana store loans, which have the potential to grow at 15-20 per cent every month.

A key part of good customer experience is handling the documentation. For kirana loans, we follow the KYC procedure. Our infrastructure leverages both Aadhaar and IndiaStack. We can therefore focus on an application-to-disbursement process of merely five minutes, upto Rs 1 lakh.

What are the technical and operational differences between your model and a pure P2P model?

We are a registered NBFC and lend on our books. Simultaneously, we operate a platform, where other institutional lenders join in, somewhat like consortium micro-financing. Our lending partners get borrowers which normally they could not access, plus this works towards their priority lending requirements.

What is the current lending on your books and how do you manage NPAs?

Our current annual lending runs to Rs 250-300 crore, where 50-60 per cent is our own book and the remaining is from the platform. For us, it is vital that we control the entire customer experience.

We largely follow the cash flow escrow model within our NBFC structure, which is within our control. From there it is our responsibility to disburse commensurate amounts to co-lenders. Other systems that we follow are the NACH and we are looking forward to improved version of UPI (Unified Payment Interface) where automated payout from the borrower’s bank account is facilitated.

Other than looking at the CIBIL record, we look at bank statements, balance sheets, social media feedback, the digital data etc. All that including the alternate data goes into the algorithm which decides the eligibility, amount and tenure of the case. The scrutiny level is intense and only 30-40 per cent of cases get approved because we are rigorous, and this shows in our NPAs which are only 1 per cent.