Microlending Startup ftcash Receives NBFC Licence From RBI

Mumbai-based microlending startup ftcash on Tuesday (November 8) said it has received non-banking financial company (NBFC) licence from the Reserve Bank of India (RBI).

With the licence now in place, the fintech player is targeting disbursing loans worth INR 100 Cr in the current fiscal year itself.

“Despite the government announcing several measures to enhance credit availability for the stressed MSMEs segment, nearly 80% of the total MSMEs in India lack access to lending. The NBFC licence will allow us to bridge this credit gap while offering loans with minimal documentation along with daily repayment options via PoS with equated daily instalments,” ftcash CEO and cofounder Sanjeev Chandak said.

He further said that the fintech player expects the disbursals to grow 3X by 2023. 

Founded in 2015 by Chandak, Deepak Kothari and Vaibhav Lodha, ftcash offers both secured and unsecured loans of up to INR 50 Lakh to medium, small and micro enterprises (MSMEs). It also sells other products such as standalone Point of Sale (PoS) machines to its merchants.

The startup had last raised $7.23 Mn in Series A funding round in 2019. It has raised funding of $10.2 Mn since its inception, and is backed by marquee names such as international non-profit Accion, FMO (Dutch Entrepreneurial Development Bank) and venture capital firm IvyCap Ventures.

ftcash deploys its proprietary in-house algorithm that analyses creditworthiness of MSMEs, and accordingly offers them loans. The fintech player has close to 60,000 merchants on its network and employs around 300 employees across eight Indian states.

The startup has disbursed loans totalling over INR 600 Cr till now. It now plans to target more than 60 Mn micro-merchants and small businesses, offering them accessible lending options.

The startup largely competes with players such as ARTH, FlexiLoans, LendingKart, LenDenClub, and Kinara Capital.

An NBFC licence allows a platform to offer loans and credit facilities. In areas where banks are still a far cry, NBFCs have emerged as the last resort for lending owing to their tailored products and digital infrastructure. Being agile and flexible enables many of these NBFCs to offer better services and cater to the demands of these SMEs which are generally disregarded by banks for reasons ranging from lack of collateral to accessibility. 

Despite contributing nearly 30% of the country’s GDP and generating 111 Mn job opportunities, the MSME sector continues to be credit-starved. The current addressable credit gap is pegged at somewhere around $397 Bn. 

Here is where some of these fintech players come in and address the small capital requirements of many of these small enterprises. The ensuing result has seen the lendingtech space emerge as one of the fastest and strongest pillars of the fintech sector. 

Of the overall $1.3 Tn addressable fintech market opportunity, lendingtech is likely to account for a major chunk, around 47% or $616 Bn of the total market by 2025. The lendingtech segment also bagged the largest amount of venture capital in the fintech domain last year.