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In conversation with Hardika Shah, CEO & Founder of Kinara Capital



Today we speak with Hardika Shah CEO & Founder of Kinara Capital, to understand how Kinara Capital is shaping the NBFC & Small Businesses through its innovative product offerings.

Read the complete interview here:

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Could you help give a sense of how far Kinara Capital has come since its existence? From when it began to where it is now?

Hardika Shah: It all began a decade ago when I had run a pilot in India with my own version of risk-assessment methodologies for collateral-free loans. I was motivated to figure out how the credit gap inequity for small business entrepreneurs could be tackled with a sustainable impact approach. In 2011, I packed up my life in Silicon Valley and moved to Bangalore to launch Kinara Capital.

Since first starting out from a home office with a handful of people, Kinara Capital has evolved into a 1000+ strong company with 110 branches across India. We are a fast-growing MSME fintech driving the vast financial inclusion of small business entrepreneurs. To date, we have disbursed over INR 3000 crores across 70,000+ collateral-free MSME loans.

The cumulative impact of our efforts has resulted in supporting over 250,000 jobs in local economies and led to over INR 700 crores in incremental income generation for small business entrepreneurs. We are now continuing to grow and seeking to expand in Tier 2 and Tier 3 cities across Tamil Nadu, Karnataka, Andhra Pradesh, Telangana, Maharashtra & Gujarat.

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How is Kinara Capital utilizing its sectoral expertise and technology to solve the unsolved credit gap in the MSME & SME Industry?

Hardika Shah: We offer both an end-to-end digital option with our vernacular myKinara app and doorstep customer service in 90+ cities across 6 states in India. We identified the problem of a sizable credit gap in the Indian MSME industry. Since traditional lenders like banks often shy away from providing loans without collateral for small businesses, we stepped in to fill the gap and are driving financial inclusion for last-mile borrowers.

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We have designed a blended model that combines digital ease and feet-on-the-street accessibility to ensure the smoothest experience for our customers. While our digital-first approach ensures an easy application process that can be completed online, our doorstep customer service means that borrowers can also get the help and human interfacing they need. Both our digital and doorstep service is offered in vernacular to ease communication.

How is Kinara Capital facilitating the entire finance process digitally?

Hardika Shah: We have always led with a digital-first model. With our recently launched myKinara app, we now offer direct access to small business entrepreneurs to go from eligibility check to loan application, approval, and loan disbursement within just 24-hours. We have our own proprietary risk-assessment methodologies which use data-driven, AI/ML-based credit decisioning models to speed up the approval process.

We have introduced digitization at all steps in our process, including digital KYC, e-stamping, and e-signing of loan sanctioning documents. We also offer 400+ tech-based digital wallet payment options for our customers to make their EMI payments. All in all, in 3-easy steps and within 24-hours, MSMEs can now access business loans at their fingertips.

How is technology transforming the NBFC industry? Do you think the trend had taken hold even before the pandemic-induced disruptions?

Hardika Shah: Well, sharing from our experience of having worked with the MSME sector for a decade, the pandemic ushered in tech adoption in a massive way and this has certainly taken hold. To give you an example, prior to the pandemic, our customers wouldn’t have considered communicating on a video call. Now, we are hosting monthly virtual workshops that our customers attend via Google Meet.

Similarly, there was no way they would have started a loan application by themselves but post-pandemic and most have, therefore, become much more open to applying for a loan and transacting online. We have seen many customers adapt to digital solutions to survive the fallout of the pandemic.

This has included their willingness to easily adopt net banking, e-invoicing, GST filings, and more. Fintechs have kept pace with the acceleration and come up with suitable models to cater to these requirements.

What are the new trends in the NBFC industry?

Hardika Shah: The fintech NBFC industry is more progressive and quicker to evolve than its banking counterpart. The latest trends in space are connected to a digital transformation to serve more customers better and faster. The customers are also becoming more tech-savvy, thanks to the proliferation of smartphones and cheaper mobile data.

By easing the lending process with digital options, the NBFC industry is increasingly shifting customer sourcing to digital means, be it via chatbots or digital ads. Onboarding of customers is being eased with a lot of lending processes being switched to digital, such as eKYC, eSigning, and digital franking. The data-led decision is removing human bias from the lending process and making it easier to move away from traditional benchmarks like credit score as the main factor. Further, EMI payments are fully digitized now.

How do you see technologies namely Artificial Intelligence, and Machine Learning, with regards to their relevance across the NBFC? What does the future look like?

Hardika Shah: Artificial Intelligence (AI) and Machine learning (ML) are facilitating the implementation of a host of processes and methodologies aimed at optimizing operations in the NBFC sector. Data-led decision models based on AI/ML are making credit decisions significantly faster and relatively free of human bias and error compared to manual decision-making.

Going forward, this will lead to the further democratization of financial services as NBFCs increasingly adopt the fintech model. By adopting digital processes and advanced AI/ML-based credit decisions, our vernacular-friendly myKinara app can take MSME applicants from loan decision to disbursement within 24-hours. And, myKinara can offer an automatic upfront discount to women entrepreneurs without requiring separate documentation.

More than 300 sub-sectors across Manufacturing, Trading, and Services MSME sectors can avail of Kinara’s collateral-free business loan digitally in the range of INR 1-30 lakhs.

Kinara Capital has been collaborating with different industry experts, banks, and technology partners to boost its digital footprint. Going forward, do you see more such engagements?

Hardika Shah: Our partnerships have always strengthened our efforts toward securing financial inclusion and growth for our customers. The newest additions to our list of esteemed partners are receiving equity funds from global investors, Nuveen, and Triple Jump.

Not only do these collaborations add impetus to our mission, our partners often bring a degree of acumen and recognition to the table, which facilitates the amplification of our voice and vision. In the future also, we intend to forge more such connections with organizations where our goals align towards supporting small business entrepreneurs.

What is the roadmap for Kinara Capital going forward?

Hardika Shah: Our plan for the future is to keep doing what we do best, which is bringing even more small business entrepreneurs into the fold of financial inclusion. We are expanding our presence in our existing geographies with a particular focus on reaching MSMEs in Tier 2 and Tier 3 cities in India. We are aiming for 500% growth and reaching an AUM of INR 6000 Cr by 2025.


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Krishna Mali
Krishna Mali
Founder & Group Editor of TechGraph.

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