Supply Curtailed, Demand Still Robust For SME Lending in India, Says This Start-Up Founder
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After the crisis that hit India’s non-banking financial companies (NBFCs), the lending landscape has seen a dramatic makeover.
Lending to small and medium enterprises (SMEs), which was already an underserved segment, has seen demand grow at a robust pace despite the curtailed growth, according to Gaurav Anand, co-founder of fintech start-up Namaste Credit.
The company helps SMEs connect to lenders and also develops proprietary technology for financial institutions to cut down on processing time and bad loans.
NBFC Crisis: Before and After
“Pre-NBFC crisis, the main challenge for us was to establish ourselves and prove that the asset light model for SME lending is a scalable model, is a proven model and can withstand various economic cycles,” said Anand.
Post-crisis, the challenge was to maintain strong conversion rates despite fewer numbers on the lending side.
“I think we have done a fairly good job of yet maintaining the core competency of our platform to maintain highest conversion rate in the industry,” he added.
When the company first started, it had hoped to see a quick adoption of its platform, which was fully digital then.
“The big learning from that was the ecosystem wasn’t quite ready,” said co-founder Lucas Bianchi.
Namaste Credit then had to take a step back and added in functionalities that would help customers adapt to their platform, Bianchi said.
Changing SME Landscape in India
The advent of technology and digitization has brought behavioral changes to SMEs in India, according to Anand.
“This is the first time in the Indian SME history that SMEs are now behaving more like consumers,” he said.
Anand believes the challenge is now for companies like Namaste Credit to make sure that this tech adoption continues.