Fintech Kinara Capital has announced securing $10 million (Rs 74 crore) from IndusInd Bank with a 100% guaranty from the US International Development Finance Corporation (DFC).
This is a part of a debt and equity round of Rs 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 utilised by Kinara Capital towards the expansion of MSME financial inclusion across manufacturing, trading, and services sectors in India.
Kinara Capital is at the forefront of driving financial inclusion in India and has disbursed Rs 2000 crore across over 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 organisations’ shared goals to promote entrepreneurship, financial inclusion and job creation.
“Our partnership with IndusInd and DFC underscores our shared commitment to ease the credit hurdle faced by most small business entrepreneurs in India,” said Kinara Capital Founder & CEO Hardika Shah.
“MSMEs galvanize India’s economy with income generation and job creation and there is an ever increasing demand for financing for businesses to rebuild and grow this year. This investment from IndusInd Bank and DFC will accelerate financial inclusion of small businesses, thereby invigorating local economies,” Shah added.
“We are glad to have associated with DFC to support a strong impact creating entity, Kinara Capital, in their growth trajectory,” said IndusInd Bank Head, Corporate & Investment Banking, CSR & Sustainable Banking, Roopa Satish.
“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,” he added.
Kinara Capital brings a wide variety of MSMEs 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 Rs 1 lakh to Rs 30 lakh. In offering both digital and doorstep customer service options, MSMEs appreciate the convenience of Kinara’s fast 24-hour direct disbursements and flexible payment options on over 400 platforms, such as Google Pay.
Artificial Intelligence and Machine Learning (AI/ML) based data-driven automated credit decisioning enables Kinara to lend confidently without relying on property collateral or credit scores for risk assessment. Thus, about 90% of Kinara’s customer base is new to credit, receiving its first-ever business loan from the company.
The social impact of Kinara’s financial inclusion work to date has led to an incremental income generation of Rs 700 crore for small business entrepreneurs and led to more than 250,000 jobs created or sustained across 90 urban, peri-urban and rural locations in India.