Fintech lender Kinara Capital raises INR 70 Cr in debt financing

Kinara Capital provides unsecured loans between 1 lakh INR and 30 lakhs to MSMEs

Invest in Visions GmbH lends capital to microfinance institutions which repay the principal as well as the interest after the loans have been repaid

According to the startup, it disbursed more than 2,400 Cr INR through 65,000 loans, thus supporting 250,000 jobs.

Fintech loan startup Kinara Capital has raised 70 Cr INR in financing of Invest in Visions GmbH (IIV). Kinara is classified as ESG by the European Union, which means that investing in the startup can have environmental, social and governance impacts.

Founded in 2011 by Hardika Shah, Bengaluru-based Kinara Capital provides unsecured unsecured loans between 1 lakh INR and 30 lakh INR to MSMEs using a digital first approach.

According to the startup, it disbursed more than 2,400 Cr INR through 65,000 loans, thus supporting 250,000 jobs. The startup’s Hervikas program provides discounted unsecured loans to women entrepreneurs.

Before this round, the fintech start-up had raised 100 Cr INR ($ 14.2 million) from private and impact investors, Gaja Capital, GAWA Capital, Michael & Susan Dell Foundation and Patamar Capital in 2019. Later in 2020, the company had increased INR 22 Cr from the same investors.

Invest in Visions GmbH was founded by Edda Schröder in 2006 to provide access to impact investing to institutional and private investors. The company’s microfinance fund provides capital to microfinance institutions around the world in the form of non-securitized loans. The average loan size is around 4.9 million euros (INR 42.8 Cr) with an average residual maturity of 22.7 months.

These microfinance institutions use the borrowed capital to provide loans to MSMEs. Once these loans are repaid, the microfinance institutions return the capital, as well as the interest, to IIV; generate returns for its investors.

In India, the microfinance sector is estimated to cover 10 percent households needing a line of credit. According to an Intellecap study, the size of the microfinance market in India is between 58 and 77 million. This translates into an annual credit demand of $ 5.7 billion to $ 19.1 billion, assuming loans between $ 100 and $ 250.

Microfinance is a lucrative business due to the high interest rates charged by lenders. At an average of around 24%, the rates are much higher than the eight to twelve percent paid by middle-class borrowers. There is also a surprisingly small amount of bad debt; as low as one or two percent.

Earlier today, a fintech start-up based in San Francisco and Mumbai Drip Capital announced a fundraising of 175 million dollars to expand its activities in South Asia and Latin America. Drip Capital also provides working capital to SMEs.

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