A staggering number of Financial Technology or “FinTech” companies have cropped up in India over the past few years, disrupting classic business and payment models. In this emerging FinTech sector, some of the most prominent buzzwords are Blockchain, Big Data, IoT (Internet of Things), etc., prompting investors to back the most tech-enabled businesses. While a lot of these companies focus on B2C business models, some of the biggest innovations in FinTech are also taking place in the B2B segment.
CredAble, which represents the latter category, is leveraging its trade finance expertise, robust technology development capabilities and its access to third party capital to reimagine supply chain finance in India. Very simply put, it connects large corporations, and their suppliers and distributors to third party capital providers through its supply chain technology platform and arranges funding programs linked to transactions within the corporate supply chain. The programs result in win-win outcomes for all supply chain participants.
CredAble’s wholly-owned subsidiary, Equentia Financial Service Private Limited, has been granted a non-deposit taking Non-Banking Financial Company (NBFC) licence by the Reserve Bank of India (RBI). Having successfully gained traction with some of India’s leading corporates, the NBFC license will allow CredAble to lend directly to SMEs and MSMEs and access debt markets to optimize its capital structure, providing suppliers with increased access to on-tap funding and untapped lending opportunities such as pre-invoice stage financing within India’s corporate supply chains.
Commenting on the approval of CredAble’s NBFC license application by the RBI, Co- Founder and CEO – CredAble, Nirav Choksi said that, “CredAble will use its NBFC status to provide short-term working capital solutions to suppliers in select eco-systems which tend to experience mismatched receivables and payables cycles. Oftentimes, these suppliers have limited access to bank financing or simply fall short of the credibility to be deemed ‘bankable’ and therefore have limited or no access to funds. CredAble fills this void by providing liquidity options during the pre-invoice and post-invoice phases.”
CredAble’s milestone couldn’t have been timed better since development of NBFCs was one of the highlights of the Budget 2019. Finance Minister, Nirmala Sitharaman announced that for the purchase of high-rooted pool assets of financially well NBFCs, totaling an amount of Rs. 1 lakh crore during the financial year, the government will provide a one-time six months’ limited credit guarantee of 10 percent to the public sector banks for their first loss. NBFCs are now also permitted to participate as lenders on the government mandated TReDS platform available to MSMEs for accessing invoice-based funding. The inclusion of NBFCs on TReDS recognizes their significant role in closing the supply gap for working capital funding to MSMEs. Nirav further elaborates, “NBFCs are playing an important role in the economy and friendlier regulations will serve to boost liquidity available to supply chains and strengthen credibility of FinTech companies in India.”
CredAble is also harnessing the power of blockchain and big data to improve its value proposition for its platform participants. The company partnered with MonetaGo, to participate on its block-chain platform which prevents double-financing of invoices and mitigates trade finance fraud. CredAble has developed a proprietary Credit Assessment Model, which analyzes financial, transactional and company-specific parameters to generate credit scores for prospective borrowers and minimizes the risk of default.