Kinara Capital secures debt funding from IndusInd Bank

Bengaluru-based fintech lender Kinara Capital has secured $10 million (Rs 74 crore) debt funding from IndusInd Bank with a full guarantee from the US International Development Finance Corporation (DFC).

This is a part of a debt and equity round worth Rs 100 crore ($13.8 million), with equity contribution from existing investors – Gaja Capital, GAWA Capital, Michael & Susan Dell Foundation and Patamar Capital.

This investment will be utilised by Kinara towards the expansion of MSME financial inclusion across manufacturing, trading, and services sectors in India, the non-bank lender said in a statement. 

“This special $10 million investment for onward lending to small business entrepreneurs will be deployed over five years from IndusInd Bank’s Impact Investing division with full backing from DFC,” the statement added.

“The guarantee from DFC eliminates foreign exchange rate fluctuation risk from the balance sheet of Kinara and it has become an important tool to mobilise debt funding for impact space companies,” said Roopa Satish, head, corporate and investment banking, CSR and sustainable banking, IndusInd Bank.

With a focus on micro, small and medium enterprises (MSMEs), Kinara has disbursed Rs 2,000 crore across 56,000 plus collateral-free small business loans.  

Kinara, founded by Hardika Shah in 2011, is a non-banking financial company (NBFC) which is operated by Visage Holdings and Finance Pvt. Ltd.

It provides collateral-free business loans in the range of Rs 1-30 lakhs, without property collateral, to a range of MSMEs from small-scale manufacturing industries to general retail shops to service businesses, filling the gap between microfinance and commercial capital in India.

It offers both digital and doorstep customer service options with 24-hour direct disbursements and flexible payment options on 400 plus platforms such as Google Pay.

In May 2019, the NBFC had raised Rs 100 crore ($14.3 million)

from Gaja Capital, GAWA Capital, the Michael and Susan Dell Foundation and Patamar Capital.

It had raised Rs 32 crore ($5 million then) from Switzerland-based impact investor ResponsAbility Investments AG in July 2018.

Since inception, Kinara has raised around $30 million (around Rs 217 crore) in equity and around $250-260 million (about Rs 1,800 crore) in debt fundraising.

"By March 2021, we aim to reach an AUM of Rs 900 crore from the current Rs 800 crore and want to disburse at least Rs 900-1,000 crore next year," Hardika Shah, CEO and MD of Kinara told VCCircle. 

Shah said the company plans to go deeper in existing geographies and aims to expand to newer ones with products such as embedded finance, to work with other value-chain products. This will continue its focus on sub-Rs 10 lakh loans over the next two quarters. "Opportunities abound. Embedded finance would be in the rural, agri or manufacturing supply chain businesses and we have recognised that we are better off partnering than starting from scratch to support small businesses," Shah added.