The partnership will help SMEs with limited or no documentation and without existing credit history to get loan
Small and micro enterprises in India have been growing at an exponential rate. But access to formal credit has been severely restricted, compelling people to turn to unorganised financing channels. According to an estimate, about 70% of this market is unaddressed by the banking system. However, with Prime Minister Narendra Modi’s pushing for demonetisation and cashless economy, the digital penetration is growing and people are now gradually turning to digital lending.
To address this segment, recently IDFC Bank partnered with Bangalore-based online lending platform, Capital Float, to provide digital lending to small businesses across India. According to company statement, the partnership will focus on borrowers who have no access to organised bank credit, with limited or no documentation and without existing credit history. It is thus expected to bring more small businesses into the organised finance architecture.
This collaboration will provide the IDFC Bank access to Capital Float’s digital network of borrowers, thereby enabling it to diversify its portfolio of small ticket loans and grow its customer base. Capital Float, in turn, can leverage IDFC Bank’s balance sheet, product innovation and customisation of banking products for this segment of borrowers.
“Both of us have unique capabilities and have come together to create a potent relationship from a financing perspective. We have witnessed the success of similar partnerships in the West, such as the collaborations between JP Morgan-OnDeck and RBS-Funding Circle,” said Sashank Rishyasringa, co-founder, Capital Float,
Agreeing with Sashank, IDFC Bank MD & CEO, Dr. Rajiv Lall says, “Radical partnering with fintech companies will enable us to serve small businesses digitally, while rapidly building the Bank’s customer base.”
He adeed, “The deep integration of our technology offering with that of Capital Float’s, will help us deliver a seamless digital experience to small merchants and entrepreneurs – from credit assessment and speedy processing of loan requests to making available to them, a range of evolved banking solutions. It will also give us access to the top 50 cities, and segments that hitherto did not have access to formal credit.”
