Excited by a strong wave of the India march in the areas of Jan-Dhan (bank accounts), Aadhar (KYC solutions) and mobile (contactability/alternative data), Ritesh, Deepak and I (classmates from the Indian School of Business 2009) We started FlexiLoans .com in 2016 to serve deserving but underserved micro and small businesses across India using data-backed credit underwriting and technology infrastructure for superior customer journeys.

When we were introduced to our first set of e-commerce and business platforms to distribute business loans digitally using surrogate data within 48 hours, we were greeted with a red carpet. However, our prospective investors/lenders wanted to see traction and credit performance, which would give us the first lesson that risk is more rewarded in lending than book growth and potential.

Soon FlexiLoans became one of the leading lenders for eCommerce sellers selling on platforms like Shopclues, Snapdeal, Flipkart, Amazon, Paytm and many more. During 2016-17, Indian MSMEs witnessed 2 big macro changes: a) demonetization; and (b) Introduction of the GST regime: Fundamental changes for small Indian businesses.

We developed surrogate underwriting models based on POS payments, e-commerce sales that ensure smooth delivery of credit, and data-backed eligibility calculation for loans, something that hadn’t been seen before. The Covid period of the year 2020-22 further increased the digital adoption of Indian businesses, and today we receive more than 3.5 lakh monthly requests and more than 10 lakh monthly visits to our digital platforms. The lesson learned here is that India is a very large, underserved, high-potential market, expect a disruption in lending by category defining lending companies like FlexiLoans.com leveraging data and technology to service viable loans. .

During 2019, Indian NFBCs suffered a major setback after the GNP and ILFS crisis, where funding literally dried up and sanctions that would take a few weeks to disburse started taking months. We then learned a hard lesson that liability and liquidity management is one of the most complicated and central tasks in Lending and, if not established as a disciplined process, can hinder growth. We developed co-lending solutions for our clients together with some prominent banks and NBFCs and they came in very handy in 2021-22 when the funding scenario for loans was tightened again due to covid but 70% of our AUM growth was served seamlessly by our lending partner through our co-lending platform. Our liability franchisee is today diversified with more than 25 banks and financial institutions that lend directly to us and multiple co-financing partners.

Lastly, the COVID period was a true test for any lender and we learned the virtues of empathy, communication and technology in our collection efforts. We stayed in constant contact with our clients, expanded our accessibility to clients, restructured their loans to client understanding level, and got <5% cost of credit even during the Covid years and fewer client escalations. We use technological tools to remind customers, obtain payments and update them in their tracking records.

In short, the last 6+ years have witnessed one of the toughest macroeconomic environments for Indian MSMEs, but at the same time, the Indian digital stack gained enormous strength with the help of regulatory support. We are now among the top Fintech lenders in the country with over ₹1,000 crore AUM, over ₹4,000 crore annual disbursement run rate and among the few profitable fintechs backed by the trust and support of our valued customers and stakeholders. In loans, one is judged by the ability to increase the risk sensitivity of the loan portfolio.

Manish Lunia is co-founder of FlexiLoans.com

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