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Indifi: giving lenders the comfort of smaller loans

Originally appeared in The Hindu Business Line on April 4, 2016

Fintech enablers can help financial institutions find better customers

Not all new businesses, even in India’s hot start-up age, are looking to be the next unicorn. Some aren’t looking for high risk large equity funding every few months or years; for them, large ticket funding announcements won’t be the regular fare. It’s why debt financing needs to work well across India.

Small loans and small credit-worthy borrowers can help keep a financial ecosystem healthy besides providing an easier environment for enterprise. Indifi Technologies is that kind of an enabler – it helps financial institutions dole out smaller loans with confidence.

Alok Mittal, CEO and co-founder, Indifi Technologies, explains, “Indifi takes a segment specific approach for lending and associates with supply chain anchors in different segments to finance their small business partners. Given that borrowers have an existing relationship with these anchors, there’s greater reliability.”

Partnership leverage

Indifi operates in travel, transportation and retail sectors with its model of debt financing through anchors (partners) such as Ola, Travel Boutique Online and Shopclues. Most lending is carried out after an assessment of the applicant’s ability and intent to repay. Data now help assessors come up with a credit-worthiness score. It’s increasingly being proven that small borrowers aren’t likely to default on payments.

Loans to Ola cab drivers typically are for two years with a fortnightly repayment schedule; Ola’s drivers can avail themselves of anywhere between ₹50,000 and ₹3 lakh. E-commerce merchants enjoy on an average 6-12 month overdraft loans or EMI-based loans with Indifi; they can receive between ₹50,000 and ₹30 lakh.

“While we seek necessary documents for KYC as per the regulatory requirements… it’s relatively easier documentation. We also help process the loans fast, within 3-4 days. The primary reason for our existence is to provide borrowers a superior experience,” says Mittal.

Buoyed by the success of its model, Indifi has entered the manufacturing segment to fund purchases of raw materials. Mittal has 20 years under his belt in entrepreneurship and venture capital, while his co-founders Siddharth Mahanot (COO) and Sundeep Sahi (CTO) have about 15 years and more in relevant fields. Since kicking off operations in October 2015, Indifi has seen no defaults. “We’re halfway down the repayment cycle with many of the loans… by the end of our first year in operations, we want to have enabled a thousand of them,” says Mittal. He’s also confident that the scope of Indifi’s existing partnerships will broaden.

“Our returns are dependent on our offering good quality assets to financial institutions… we get our commissions after loans are paid back,” Mittal says of Indifi’s incentives to continue its track record.