Kinara Capital Secures $10 Mn From IndusInd Bank

This investment will be utilized by the company towards the expansion of MSME financial inclusion across manufacturing, trading, and services sectors in India
Kinara Capital Secures $10 Mn From IndusInd Bank
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Bengaluru-based fintech non-banking financial company (NBFC) Kinara Capital, on Monday, announced that it has secured $10 million from IndusInd Bank with a 100 per cent guaranty from the U.S. International Development Finance Corporation (DFC).

This is a part of a debt and equity round of INR 100 crore, with equity contribution coming from Kinara’s existing investors – Gaja Capital, GAWA Capital, Michael & Susan Dell Foundation (MSDF), and Patamar Capital.

This investment will be utilized by the company towards the expansion of MSME financial inclusion across manufacturing, trading, and services sectors in India.

“Our partnership with IndusInd and DFC underscores our commitment to ease the credit hurdle faced by most small business entrepreneurs in India,” said Hardika Shah, founder, and chief executive officer, Kinara Capital. “Given the stellar role that small businesses play in galvanizing the Indian economy with income generation and job creation, we see an ever-increasing demand for collateral-free loans. This investment from IndusInd Bank and DFC will accelerate financial inclusion of small businesses, thereby invigorating local economies.”

Kinara Capital is at the forefront of driving financial inclusion in India and has disbursed INR 2000 crore over across 56,000 collateral-free small business loans.

The 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, part of the US federal government, and an emerging markets impact leader. This three-way partnership between Kinara Capital, IndusInd Bank, and DFC unites the organizations’ shared goals to promote entrepreneurship, financial inclusion, and job creation, the company said.

 “We are glad to have associated with DFC to support a strong impact creating entity, Kinara Capital, in their growth trajectory,” stated Roopa Satish, head of corporate and investment banking, Corporate social responsibility (CSR) and sustainable banking, IndusInd Bank. “The guaranty from DFC eliminates foreign exchange rate fluctuation risk from the balance sheet of Kinara and it has become an important tool to mobilize debt funding for impact space companies.”

The platform maintains that it brings a wide variety of micro small and medium enterprises (MSMEs0 into the financial inclusion fold, such as small-scale manufacturing industries to general retail shops to service businesses, by providing collateral-free business loans in the range of INR 1 lakh to INR 30 lakhs.

 “We hold the organizations that we fund to a very high standard and Kinara Capital is a role model when it comes to last-mile delivery,” added Loren Rodwin, managing director, social enterprise finance team, the office of development credit, U.S. International Development Finance Corporation (DFC). “Commitment towards financial inclusion from Kinara Capital has made it possible for us to collaboratively help India’s small business entrepreneurs. We are motivated by the high potential and the high prospects of the diverse MSME sector in India and proud to partner with both IndusInd and Kinara Capital.”

Artificial intelligence and machine learning (AI/ML) based data-driven automated credit decisioning enables the platform to lend confidently without relying on property collateral or credit scores for risk assessment. Thus, about 90 per cent of the company’s customer base is new to credit, receiving its first-ever business loan from the company.

The social impact of the company’s financial inclusion work to date has led to an incremental income generation of over INR 700 crore for small business entrepreneurs and led to more than 250,000 jobs created or sustained across 90 urban and rural locations in India.

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