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In 2014, driven by a desire to tackle the challenges faced by Indian MSMEs, Lunia made a decisive break from his secure banking career to pursue a bold new venture: Lendingkart
It was a proud moment when Fullerton Financial Holdings (FFH), a wholly owned subsidiary of Singapore-based Temasek, invested approximately $87 Mn in the company
With its assets under management nearing the INR 10K Cr mark (exactly INR 7127 Cr as of March 2024) and an initial public offering (IPO) slated in next 24-36 months, it is poised to move to the next level.
Capital is the fuel to accelerate a business. But for India’s 63 Mn micro, small and medium enterprises, which accounted for 45.73% of total exports in FY24, securing collateral-free business loans remains a major hurdle, slowing their growth and competitiveness. Fortunately, India’s ongoing fintech revolution and new-age startups have risen to the occasion to plug this credit gap. Among them is Lendingkart, a digital-only MSME lending platform set up by Harshvardhan Lunia, a banker-turned-entrepreneur.
Born into a self-made business family based in Ahmedabad, Lunia is an alumnus of the Indian School of Business and ICAI (Institute of Chartered Accountants of India). He spent a decade in corporate banking, holding senior positions at ICICI Bank and Standard Chartered. However, he left his banking career in 2010 to cater to cash-strapped MSMEs.
Launched in 2014 to make business finance easily accessible to MSMEs, Lendingkart
Although the company was on a strong growth trajectory a couple of years ago and posted a profit of INR 119 Cr in FY23, it saw a 97% dip in profitability to reach INR 3.25 Cr in FY24.
According to Lunia, the decline was caused by rising staffing costs, increased credit expenses and fees associated with portfolio renewals and new registrations under credit-guaranteed schemes.
Despite the setback, its assets under management (AUM) stood at INR 7,127 Cr as of March 2024, signalling the company’s continued focus on long-term growth.
Lendingkart has bolstered its support system to enable AUM growth and foster its outstanding portfolio. For instance, it has improved credit underwriting processes, risk mitigation systems, internal audits, compliance and regulatory functions to align with enhanced regulatory requirements.
Additionally, it has strengthened customer service and collection departments to enhance customer satisfaction and operational efficiency. The platform is also building a talent pool for new initiatives like personal loans and credit cards.
In sum, the company is fine-tuning its growth strategy while navigating a challenging financial landscape ahead of a planned IPO in next 24-36 months.
However, Lunia has never viewed the business as a matter of mere numbers. It is about building trust and helping MSME owners achieve their goals. Unlike people who try to make a quick impact, the Lendingkart founder says patience and resilience are key to long-term success.
His leadership approach is rooted in trust and empowerment, as he gives young talent responsibilities for exceptional outcomes.
“Pace yourself; success takes time. Meanwhile, enjoy the journey,” Lunia advises aspiring entrepreneurs.
In this exclusive interaction with Inc42, part of our Griffin Dialogues series, Lunia provides insights into his journey, business philosophy and leadership style, which helped build the narrative of Lendingkart, one of India’s leading fintech enterprises. Here are the edited excerpts.
Inc42: How do you see FY25 ending? Can Lendingkart rein in expenses and ensure substantial profit growth? What is your outlook for FY26?
Harshvardhan Lunia: We expect a decline in profit in the current financial year. A drop in the top line is the major reason here due to shrinking AUM, rising costs of funds amid stricter RBI policies and broader macroeconomic pressures on credit costs.
A key regulatory shift in April 2024 also added to these challenges. The RBI clarified that outstanding first loss default guarantees (FLDGs) must be deducted from the capital rather than factored into risk-weighted assets (RWAs). This change in accounting has put additional strain on the company’s CRAR, or capital to risk-weighted assets ratio [also known as capital adequacy ratio, or CAR].
Lendingkart has adopted a more conservative disbursement strategy in FY25 that also aligns with its revised credit policy. This will further reduce our AUM, but it is an essential move to navigate risks in the unsecured lending segment.
In spite of these challenges, the company remains focussed on stabilising financial performance through a disciplined approach to disbursements, prudent risk mitigation and tighter cost control across the organisation.
Inc42: What will be the key challenges for Lendingkart after an IPO? How are you preparing for the shift?
Harshvardhan Lunia: The biggest shift we must navigate is moving from a founder-led business to a publicly accountable company. This transition means tighter governance, more regulatory compliances and a higher expectation for transparency. Fortunately, as a debt-listed entity, we have a solid foundation to cope with these changes. We will also diversify our products to reach more MSMEs.
On a personal level, public listing means adopting a more structured leadership approach, balancing agility and stability while ensuring we continue to innovate. I am excited about building a team to propel Lendingkart to the next level.
A key lesson here is that timing matters. Many companies have rushed into IPOs driven by market momentum rather than strong fundamentals, which has backfired. Another critical lesson is managing expectations, as public markets operate differently from private funding rounds.
That’s why we are strengthening our financials, ensuring a robust revenue model and keeping our growth story compelling, all supported by strong unit economics.
Inc42: Taking a company public is a significant milestone. Now that you are taking the IPO route, what does this achievement mean to you?
Harshvardhan Lunia: An IPO is imperative for growth. Private capital can only help you grow to a certain level. Once you reach that milestone, gaining customer trust at scale is easier via the IPO route. So, one should welcome the scrutiny of the public markets to get there.
Investors, too, must recognise that MSME lending is a long-term commitment. We won’t chase short-term gains at the cost of sustainable growth. Achieving that balance hinges on transparent and honest communication before you reach the IPO stage.
Going for an IPO is a moment of pride but also a matter of responsibility. The IPO is not the finish line; it is a new chapter and a critical milestone for all stakeholders.
Professionally, it is about guiding Lendingkart into a new era of growth while staying true to our core mission. Getting there will be a humbling experience. Seeing the company we have built reach this stage is both a personal and a professional triumph.
We have built a comprehensive digital lending platform and the largest co-lending network for unsecured business loans. Next, we will extend this capability to offer more financial products to a bigger customer base. However, we must continue to invest in technology and refine our risk assessment and underwriting processes.
Inc42: Lendingkart raised substantial funding over the years. Was there a particular round that turned out to be a game changer?
Harshvardhan Lunia: We have always focussed on building a sustainable business instead of aggressive expansion. Capital is the fundamental resource in the lending space. So, we have deployed it to the right places and are very disciplined about investing, whether enhancing our underwriting processes or improving operational efficiency.
Fullerton’s investment in 2020 was a pivotal moment. We not only raised $87 Mn but also onboarded an investor whose deep understanding of this segment added a lot of value and helped us scale.
FFH’s involvement validated our business model and enabled us to lower lending rates, making credit more accessible to Indian MSMEs. It also cemented our position as a credible player in the stringently regulated financial sector.
Inc42: Steering a business through thick and thin demands more than strategic insights. It calls for personal transformation. How did you evolve as a leader?
Harshvardhan Lunia: I have learnt to delegate effectively, trust my leadership team more and focus on long-term strategy instead of getting stuck in day-to-day operations. Earlier, I was very hands-on about every aspect of the business. Now, my role is to empower others and see them execute efficiently.
The pandemic years were particularly challenging. Many senior staff members left us, some by choice and others due to difficult business circumstances. However, our customers, the MSMEs, were hit the hardest.
Nothing was immune to Covid; every business suffered. We adapted to the new normal by streamlining our spending and prioritising the needs of our existing customers. For instance, we scaled back our marketing expenses to near zero and solely relied on organic traffic.
Those years also shaped the future of digital lending. The world is now more open to online credit, and we have gained more confidence backed by our customers and the ecosystem. I think loyalty has been reciprocal. As we stood by our customers in those tough times, they stayed with us, and our business has grown.
When it comes to leadership, we hire people with a data-driven and customer-focussed approach. Again, innovation, for us, is not the pursuit of the latest technology. It must enhance operations, reduce costs, or improve the customer experience.
Above all, we have never sacrificed credit quality for growth. Our risk models are designed to ensure sustainable lending, and we have robust mechanisms to monitor portfolio health. Investors who understand the fintech space know responsible growth is far more valuable than chasing hypergrowth.
Inc42: How have you crafted the Lendingkart narrative to stand out in a highly competitive MSME lending market?
Harshvardhan Lunia: It’s pretty simple. We have focussed on execution speed, ease of use and seamless customer experience to build our narrative. As an MSME finance specialist, we know that micro and small business owners don’t like complex financial jargon. What they want is fast and hassle-free access to credit.
Adapting to customer requirements is one part of the story. But there is another integrated toolkit to enhance our operations. From discovery to disbursal, our lending system is fully digital and data-driven. Hence, data is collated from loan applications and fed into our algorithms to help analyse local markets. We do it better than most.
That’s not surprising. Even in 2021, we were India’s largest digital distributor for business loans by reach and volume. But we kept it under wraps. It wasn’t until 2022 that we decided to share that story with a simple yet compelling tagline: Business loan bole toh sirf Lendingkart (Business loan means Lendingkart).
Since then, word-of-mouth has been our most powerful marketing tool. When a small business owner gets a loan in 24 hours and tells 10 more people, that’s better than any ad campaign.
Our customers are at the heart of these things. They are the true heroes who make our narrative meaningful. Technology is just the enabler.
Inc42: How does Lendingkart adapt to the evolving regulatory landscape?
Harshvardhan Lunia: We have been actively involved in industry discussions to establish fair and transparent digital lending guidelines and collaborate with the authorities regarding self-regulation. As the country’s largest digital-only MSME lender, we know the responsibility that comes with our role.
So, we are simplifying access to finance to stay aligned with the RBI’s goal of financial inclusion. We also work closely with regulators to ensure full compliance. Fintech cannot exist outside the regulatory framework; it must evolve within it.
However, compliance is a baseline, not a barrier. We will continue to innovate responsibly as we have always done before.
Inc42: What has been the most defining moment of your entrepreneurial journey? What keeps you going and growing?
Harshvardhan Lunia: Entrepreneurship is an ongoing journey of discovery and a constant learning process. The best thing I have learnt is that fintech isn’t only about technology; it’s also about trust. Trusting young talent, empowering them with responsibilities and watching them execute critical tasks perfectly are incredibly rewarding. I would say this realisation has been most humbling and inspiring.
The toughest moment came during the pandemic when we had to let people go. It taught me that leadership is about caring for your people, especially in times of crisis.
If I could advise my younger self, I would say: Give yourself time. Success does not come overnight. So, be patient and enjoy the journey.
What keeps me going is the scale of the opportunity ahead [MSME financing is integral to socio-economic growth]. I firmly believe that if you stay focussed, lead by example and listen effectively – to your customers, markets, regulators and all other stakeholders – you will always stay ahead of the curve.
[Edited by Sanghamitra Mandal]
Update: March 17, 2025 (11 AM) – The story previously stated that the Lendingkart IPO was expected in May 2025. This has been corrected to a timeline of 24-36 months.
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