DMI Sparkle Fund Leads $4.5 Mn Investment Round In Digital Lending Platform Abhi Loans

KNAB Finance Advisors Private Limited, a regulated non-banking financial company (NBFC) registered with the Reserve Bank of India (RBI), has raised $4.5 Mn in a mix of debt and equity round for its digital lending platform Abhi Loans. 

The funding round was led by DMI Sparkle Fund. The round also saw participation from other prominent angel investors such as Niten Malhan, Ashvin Chadha, S K Jain, among others.

The company plans to use the fresh funds for technology development and growth of loan book. KNAB Finance is building a digitally distributed and secure loan ecosystem with its product Abhi Loans.

Founded by Deepit Singh and Mandeep Chaudhary, Abhi Loans’ unique selling proposition is rapid approval and disbursement of loans against securities pledged as collateral. It is also entering the market with loans against shares and mutual funds.

As per KNAB Finance, while such lending products were earlier available, they were only high-value loan offerings for high-net-worth individuals. However, Abhi Loans offers the product to retail customers for smaller loan amounts starting from INR 15,000. 

Abhi Loans claims to provide capital to borrowers within 24 hours and any delay in reimbursement of the loan amount entitles the latter to a 50% waiver on processing fee. The rate of interest is fixed at 10.5% per annum throughout the loan tenure. 

“Loans against securities will be the first product in our portfolio. It will lay the foundation for many more innovative solutions,” said Singh, founder of Abhi Loans.

The Sparkle Fund, an alternative investment fund (AIF) of the DMI Group, was launched in 2017. It invests in early-stage startups and fintech companies.

Lending Tech Ecosystem In India

With India’s overall fintech market opportunity estimated to be $1.3 Tn by 2025, growing at a CAGR of 31% during 2021-2025, lending tech is likely to account for 47% ($616 Bn) in the broader fintech segment, as per an Inc42 report.

Though there are regulatory constraints in the lending tech space, the first set of digital lending guidelines published last week by the Reserve Bank of India (RBI) has removed some of the regulatory overhangs that kept the space in uncertainty for a long time.

In the recently published regulatory framework for the lending entities regulated by the central bank, the latter has not only prescribed business conduct requirements but also emphasised on data protection of borrowers.

A few other fundraising announcements in the digital lending sector in recent days include NBFC and lending tech startup Lendingkart securing INR 50 Cr in a debt funding round from InCred Capital and Yubi.

Fintech lending startup CredAble also raised $9 Mn from Axis Bank and OAKS Asset Management earlier this month. Besides, lending fintech startup Credit Fair raised $10 Mn in a mix of debt and equity round.