We want to be in 100 cities in the next 12 to 18 months: Gaurav Hinduja & Sashank Rishyasringa – Business Standard
Written by Alnoor Peermohamed
Bengaluru-based startup Capital Float, which lends to small and medium enterprises (SMEs), plans to grow its presence from 40 cities to a 100 cities in the next 12 to 18 months. While sellers on e-commerce platforms make up a large chunk of whom the company lends to, it says it will focus more on tier 2 and tier 3 businesses, which might be solely offline but have the potential to grow massively. Gaurav Hinduja and Sashank Rishyasringa, founders of Capital Float talk to Alnoor Peermohamed in the company’s plans. Edited excerpts:
The e-commerce segment is fairly new and there’s bound to be volatility. How do you think that might impact your business?
Hinduja: E-commerce merchants are the core to what we do and it’s an important vertical, but we’ve also diversified outside.
We do loans to a lot traditional SMEs — brick and mortar, manufacturing and service type of organisations because that segment is 30-40 million, whereas e-commerce is 100-200 thousand. I think almost all sellers sell on all marketplaces. And when we underwrite the business, we look at a combination of things. Sales across marketplaces, and how does that look across his offline sales as well, because a lot of sell offline. We look at a holistic view of the business before we actually decide to give the person a loan.
Data on sellers is harder to come by in the offline world. How are you tackling that?
Rishyasringa: You’ll be surprised as to how much data is available on any business in India and that’s very much a big part of the IP we’ve built since the early days. I think what we’ve been able to do is build a lot of pipes for data sources such as Aadhaar, NSDL, and a whole host of other government and legal databases.
The borrower is also able to give us access to a lot of data that we can then use in deciding what terms and what kind of loan to give them. For example, social media is a very interesting input that we consider in our underwriting model.
On the online piece, yes there is some additional data which helps with the speed of lending. So today we give real time approvals to e-commerce sellers in 10 to 15 minutes.
What is your primary source of raising capital?
Hinduja: Like most financial institutions we obviously raise equity right, and we have raised a little over Rs 100 crore from some of the best VCs, but also we have raised debt.
What are your sort of default rates? How are you working to keep them low?
Hinduja: Ironically, a lot of the bank’s defaulters are not coming from the SME sector. They’re actually coming from large borrowers. A lot of what we do is the underwriting, through different data, and we do that to keep our credit costs, which are defaults, et cetera, really low.
Today they are very low, I’d say 80-90 per cent better than any NBFC that lends to SMEs out there. That said, it is still early days. This is a lending business at the end of the day, there are going to be defaults.
What do you think will happen when guys like Alibaba increase their focus in India? Where do you fit in?
Rishyasringa: B2B e-commerce has the potential to be far larger than B2C e-commerce in India. And we think what Alibaba has been able to achieve in China and in India with its SME base for exporters and importers is tremendous.
We are partners with Alibaba. You can infer from that, that we’re already active in the space and its part of our strategy.
How is this partnership going to work?
Hinduja: They’re going to look at us to help get more SMEs to become active Alibaba users. But at the same time a lot of their SME merchant base will require financing, whether it’s for domestic transactions, or cross border transactions. They will look at a financer that really has the speed and the agility to meet the SMEs requirements in that sense.
What are your growth plans?
Hinduja: We want to be in 100 cities in the next 12 to 18 months and obviously a lot of that growth is going to come from tier 2 and tier 3 towns. Because banks really don’t have a presence there.
While people and SMEs in the top 8-10 cities can still access a bank branch, bank branch penetration in those tier 2 tier 3 towns is almost negligible. I think that’s where we’ll see a lot of growth and through the make in India and e-commerce stuff you’ll see a lot of business growth in those cities as well.
What sort of regulatory hurdles do you see yourselves having to cross?
Rishyasringa: Actually in the financial services space I think we’ve got a very proactive regulator and what you’re seeing in these payment banks, small finance banks, e-KYC, I think these are all steps in the right direction and we obviously hope that we continue to see these steps.
News piece sourced from Business Standard. Read the full piece here.
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FinTech is disrupting the very fundamentals of money management the world over, and India is no exception. With the Prime Minister’s focus, especially, on making India “digital”, a number of programs and schemes have been launched. In fact, many of the schemes have taken a cue from the private sector and have upped the innovation game to deliver a comfortable and convenient money management experience. From the point of sale (POS) machines to merchant cash advance to e-wallets, we are seeing a plethora of FinTech products and services change the way we pay. And this phenomenon is occurring across industries, whether it is the fast moving e-commerce sector or the heavy-duty manufacturing sector.
Consumers are at the receiving end of these changes and need to fast adapt to the new payment means. First it was a revolution of the plastic money, with cash bring replaced by credit and debit cards. This demanded the use of other paraphernalia, such as the point of sale devices at the checkout counters. Now, with niche FinTech innovators such as Paytm and MobiKwik, even the point of sale devices are not required. It is just scan and pay. The government has taken this ease of payment a step further by bringing to light the Bharat QR payment method.
What is Bharat QR
Bharat QR is a payment process driven by a Quick Response Code or QR code. A user who has the Bharat QR-enabled bank application on his or her mobile phone can make a payment quickly, easily and safely. The best part is that scanning the machine-readable optical grid translates the bank account information without your having to swipe or hand over a card, making it extremely convenient! This is because the QR grid stores the person’s bank information. This is similar to using a Paytm or a FreeCharge or a MobiKwik e-wallet, the advantage being that in Bharat QR, payments are linked directly to your bank account rather than to a separate e-wallet. There is thus no hassle of transferring money to your Paytm wallet or MobiKwik wallet. Alternatively, the user can also access Bharat QR through the Bharat Interface for Money or BHIM universal app, which is a UPI developed by the National Payments Corporation of India (NCPI).
Currently, Bharat QR is available on the mobile applications of 15 nationalised and private banks, namely – Axis Bank, Bank of Baroda, Bank of India, Citi Union Bank, DCB Bank, Karur Vysya Bank, HDFC Bank, ICICI Bank, IDBI Bank, Punjab National Bank, RBL Bank, State Bank of India, Union Bank of India, Vijaya Bank and Yes Bank. It is also linked to VISA, MasterCard, American Express and RuPay cards. Its scale is expected to increase in the coming days.
A look at Point of Sale
Bharat QR is thus a leap ahead of the Point of Sale payment mechanisms, which were the mainstream payment devices used at most commercial and consumer locations such as shops and restaurants. The Point of Sale or POS terminal is a computerised replacement for a cash register that can process credit and debit cards. A customer swipes their card in the machine and enters the PIN number to verify and complete the transaction. The POS is installed at the merchant location, mostly by the bank that they associated with. Not only does the merchant bear the cost of the device and the installation, but they are also compelled to pay the issuer bank a merchant discount rate (MDR). This is a percentage of the transaction value. In a bid to boost cash transactions, the RBI had rationalised the Merchant Discount Rate (MDR) for debit cards. Accordingly, a cap has been introduced for debit card point of sale payments, capped at 0.75% for transaction values up to Rs 2000 and at 1% for transaction values above Rs 2000. However, it continues to be an expense for the merchant, and is often passed on to the customer by increasing the selling price of the product or service. Often, buyers may not even realise that they are being charged extra for the MDR.
Other payment instruments: e-wallets
The first leg of replacing the point of sale was the onslaught of e-wallets such as Paytm and FreeCharge. Although they operate on the same principle as that of scanning a QR code, they are somewhat restrictive because they require both the transferor and the receiver to have the same e-wallet installed on their smartphones. The need was thus felt for a faster and easier money transfer mode, which caused the Bharat QR to come to the fore, thanks to the design and development by NCPI.
Advantages of Bharat QR
The Bharat QR is a step towards financial freedom by means of cashless transactions. It relieves one from the hassle of swiping at the point of sale or of facing detection troubles with one’s plastic money at the point of sale. Because there is no requirement of a physical use of a card, the risk of data theft or security issues through tampered or cyber-compromised point of sale devices is also minimised. Costs are reduced from both the consumer and merchant viewpoints, since the need for expensive point of sale devices and their MDR charges is eliminated. A significant advantage of Bharat QR is its ease of operation; i.e., the buyer and seller need not download the same payment application to make the payment happen, unlike Paytm. This is because the Bharat QR is directly linked to a single bank account. It poses a logistical relief, since businessmen now need not shuffle between different wallets and track their credits and debits – a tedious task. Moreover, the money transfer happens instantly because Bharat QR uses an IMPS service. Bharat QR truly has the potential to create a FinTech revolution.
It is clear that Bharat QR paves a convenient way ahead for paying and receiving funds. It is a great idea to get started on this universal tool. As a merchant, you must register with your banks to get authorised to receive payments through Bharat QR. Link your bank account to the BHIM app and generate your unique Bharat QR Code, take a print of your QR code and stick it onto your payment counter to get started.
Oct 24, 2018
The Great Indian Finance Festival or GIFF 2017 is an online initiative by Capital Float to offer working capital loans to MSMEs across different sectors in the country. GIFF aspires to reach out to over 10 million SMEs by offering lucrative offers on working capital finance, in a bid to bridge the credit gap that small businesses continue to be challenged by. Over the next three months, starting July 1, 2017, GIFF kicks off a one-of-its-kind loan festival that will provide Indian SMEs with the working capital support they need to diversify and scale up their businesses.
|Working Capital Loans
|Up to Rs. 10,000 PayTM gold for every loan on offer||Three Long Months
Jul 1 – Sep 30, 2017
|Interest as low as
At GIFF 2017, you can get access to quickly disbursed, flexible, short-term loans that are typically used for the purchase of inventory, servicing new orders or optimising cash cycles. You can apply online in minutes, select desired repayment terms and receive funds in your bank account in as little as 3 days.
Products & Features:
During GIFF 2017, we will be providing three of our loan products at interest rates starting 16%:
|Merchant Cash Advance||Term Loan||Online Seller Finance|
|Loan against card swipes and receivables – ideal for merchants with consistent card settlements||Unsecured business loan – ideal for SMEs with positive monthly cash flow||Online Sellers – ideal for those looking to expand their marketplace presence and sales|
|Credit: Rs 1 lakh – Rs 1 crore||Credit: Rs 1 lakh – Rs 50 lakh||Credit: Rs 1 lakh to Rs 1 crore|
|6 months – 1 year||6 months – 3 years||Flexible payment options|
|Know more||Know more||Know more|
In addition to the three-month long festival, watch out for short ‘Flash Sales’ throughout GIFF 2017. A flash sale lasts for three days, and you can earn up to 10,000 in PayTM gold!. Each product will feature a flash sale of its own, so be sure to visit the GIFF website regularly!
The entire process at GIFF 2017 is online. You need to fill up an online application and submit all the relevant documentation. If you meet the eligibility criteria and your paperwork is correct, your application can be approved within a few hours. The best part is that the loan amount will be credited to the bank account within 72 hours of approval.
GIFF 2017 Application Process
The first step is to fill up basic details about yourself and the company such as the registered name of your enterprise, years of operation, type of company (private limited/partnership/proprietorship/unlisted), company turnover and loan amount required in the online application form. Next, upload relevant documents on the website. These documents or paperwork are necessary to demonstrate your creditworthiness and ability to repay.
Capital Float leverages technology such as big data analytics and proprietary algorithms to make quick lending decisions based on the verifiable data you have provided. Over the years, the technology and intelligence we deployed have ensured better decision-making and quick disbursal of loans.
GIFF 2017 and the festive season
A recent Nielsen’s global consumer confidence index report showed that India’s consumer confidence score rose to the highest it’s ever been in the last 10 years. This swing in consumer sentiment even made Nielsen proclaim India as ‘a nation of determined optimists’. So, as we head into a period of positive consumer sentiment and with many major festivals coming up, the timing seems perfect for SMEs to think big.
Even though we Indians have festivals all round the year, consumer spending spikes from July to December. Traditionally, Ganesh Chaturthi, Onam, Durga Puja, Dussehra, Diwali and Christmas have been occasions for large spending by the Indian consumer. In 2016, Indian consumers spent an estimated amount of Rs 12,000 crore ($1.8 billion) online during Diwali alone. The festive season is also when the marketers spend almost 40% of their annual budget in attracting customers and boosting sales by 20% – 25%.
Timing is everything:
Cashing in on an opportunity at the right time is critical for SMEs to prosper. The upcoming festive season and a high consumer confidence score is a lucrative opportunity that smart SMEs will want to leverage for growth and expansion. Over the next few months, we will be providing our impactful working capital finance products at discounted interest rates with our esteemed promise of 3-day disbursal. Tap into this opportunity and propel your enterprise towards a busy season ahead, equipped with all that you need to succeed and #BreakLimits.
Oct 24, 2018
Business owners frequently face working capital challenges. Supplier payments are a constant concern for SMEs. In manufacturing, trading and services, where lead times are significantly high, businessmen often finance operations by resorting to informal channels of credit. Traders who deal with shorter sales cycles tend to miss out on large orders as they are unable to pay their suppliers large sums of money to make bookings.
Capital Float’s Pay Later works exceptionally well in these cases. Pay Later carries a pre- defined credit facility which is unique to each applicant depending on various factors, for instance, industry the applicant operates in, scale of the applicant’s business and some basic financial metrics. You can make multiple drawdowns from the assigned balance and pay interest only on amounts utilized. By repaying the amount used, you reset the balance for further usage, making Pay Later a flexible, rolling loan product.
For example, if you’ve been provided a credit facility of Rs 1 lakh, you can make up to 4 drawdowns of Rs 25,000 each. Upon your first drawdown, you have a balance of Rs 75,000. You will be charged interest on the drawdown (Rs 25,000) and not the entire amount (Rs 1,00,000). By repaying the amount used, your balance will be restored to Rs 1,00,000.
With Capital Float’s convenient mobile app, you can use this zero-collateral loan product from absolutely anywhere. To make payments, all you need to do is take a photograph of the invoice with your mobile phone and upload it using our app. The vendor is paid on your behalf within 24 hours of the upload.
Pay Later is an incredibly fast and paperless access to credit that works along the similar lines of a credit card. The functionality of this product as the name suggests – use the facility now and simply pay later. Following are the salient features of the product:
1. Get credit of up to Rs. 25 Lacs
With Pay Later, you are eligible for credit of up to Rs. 25 Lacs, which ensures that you’re never short of funds.
2. Easy, hassle-free online application procedure
The entire procedure will take just 10 minutes of your time. To get started, you can sign-up on Capital Float using your desktop, laptop, tablet or smartphone. Fill a simple online application form and submit the requested documentation to conclude the process.
3. Get approved in 3 days
Where traditional financial institutions take up to 8-12 weeks, we assess your eligibility and offer you a customized credit amount within 72 hours.
4. Convenient repayment at the end of 30/60/90-day loan term
Pay Later offers three flexible repayment plans that work in accordance to your business cash flows. You can choose to repay loan amounts at the end of 30/60/90 days from the date the loan is utilized. This way, you’re never bogged down by hefty monthly instalments.
5. Pay distributors/suppliers via Capital Float’s convenient mobile app
Make payments with just a few taps on your smartphone via our mobile app that you can download for free from Play Store and App Store. The payment is confirmed instantly, and reaches the vendor’s account in less than 24 hours.
Pay Later is a collateral-free loan product, which means you don’t need to pledge your property or assets to avail the loan. Your credit amount is determined by the potential and profitability of your business.
2. Flexibility in drawdowns:
Pay Later allows you to use a portion of the total amount any time you wish to. For instance, if you have a credit facility of Rs. 10 lakhs, then you can utilise the full amount or a fraction of it at any given time, depending upon your requirement. The user-friendly mobile app efficiently keeps track of your balance, so that you can manage repayments accordingly. You can also draw amounts as low as 25,000 rupees, hence making this product extremely convenient to use.
3. Interest applicable only upon drawdown
You’re required to pay interest only for the amount you’ve utilised and not on the entire credit amount assigned to you.
Click here to read about the features and benefits in more detail.
Eligibility and Documents
The eligibility criteria for Pay Later is extremely simple. All you need is a small list of documents at the time of application:
- Applicant’s business to have at least 2 years of vintage
- Applicant must purchase from a reputed supplier
- Applicant must have 3 months of transaction data with the supplier
- Audited financials for the last 2 years
- VAT returns and bank documents for the last 6 months
- KYC documents of the applicant as well as the organisation
How to Apply
Applying for credit via Pay Later involves a simple four-step procedure. As long as you have a computer or smartphone and a good internet connection, you can apply from anywhere. Here are the steps involved:
- Apply & get empaneled
Sign up on Capital Float’s website to kick-start the procedure. Fill out the form with your personal and professional details, and click on submit.
2. Upload the necessary documents
The next step involves uploading the requested documents. This includes business vintage of two years along with some basic KYC documents.
3. Receive instant approval
Receive approval on your application within hours. In less than 3 days from the time of application, your credit facility will be set up for your use.
4. Credit facility ready for use
Once your credit amount is determined, you can start using Capital Float’s mobile app to create tranches by uploading invoices and making vendor payments.
Fees and Charges
At Capital Float, we conduct business in the most transparent manner possible. Therefore, you’re only obligated to pay a processing fee of up to 2% for the loan. Rest assured, there are no hidden or pre-closure charges that pop-up during or after your application procedure.
Oct 24, 2018