Hardika Shah, Founder -; CEO, Kinara Capital

17 Mar 2022 , 10:49 AM

In an interaction with Mamta Maity, indiainfoline.com, Hardika Shah, Founder & CEO, Kinara Capital said “our customers on average are in their mid-thirties and usually have 8-10 years of experience before they started their own businesses.”

How is Kinara Capital ensuring financial inclusion in its truest sense? An understanding about their business model as well.

We are ensuring financial inclusion of the micro-small-and-medium enterprise (MSME) sector in India by addressing the credit gap that hinders entrepreneurs. MSMEs form the backbone of our economy but are severely underserved in terms of formal financing.
By providing fast and flexible collateral-free business loans, we are enabling growth that strengthens local economies with income generation, job sustenance and new job creation.

In addition, we provide an automatic discount for all women-owned businesses with our HerVikas program. The direct impact of Kinara providing access to credit has led to incremental income generation of Rs700+ crore for MSME entrepreneurs and led to supporting over 250,000 jobs in local economies across 90+ cities in India.

Our business model is based on providing accessible capital to small business entrepreneurs and built with AI/ML data-driven decisioning. With an established 110 branches in six states, we provide both phone and doorstep customer service in vernacular languages. With our myKinara app, our entire process is fully digital and we can go from loan decisioning-to-disbursement of business loans within 24 hours.

What are some of the trends that Kinara has observed while lending to MSMEs?

Our customers on average are in their mid-thirties and usually have 8-10 years of experience before they started their own businesses. Kinara Capital was launched a decade ago so if you were to think about it, the average 35-year old today is far more tech-savvy than what was possible a decade ago. Proliferation of smartphones, especially in Tier 2 / Tier 3 cities, with access to cheap data has made it easier for many to conduct business activities from their phone, including net banking, digital payments, e-invoicing, and even accessing government services such as Udyam Registration, GST, etc. We also began conducting our ‘Grow With Kinara’ workshop series that customers attend via Google Meet, something there was no willingness for pre-pandemic. We see that MSMEs unwilling to adopt basic digital methods will be disadvantaged. Now, for sales as well, many MSME owners have adopted Whatsapp and platforms like Dunzo, Swiggy, etc. to promote and deliver their products.

What are going to be the change drivers for small businesses in this new year?

Since last year, MSMEs have been on a strong recovery path however, many MSMEs are still rebuilding while adjusting to the increased cost of raw materials, which has increased up to 50% in some cases. The increased cost of input is leading to lower margins. As the effects of 2 years of pandemic continues, many micro- and small- MSMEs are still struggling. Concentrated efforts should be made on amending the regulations related to raw material imports and capping the GST which can give some breather to MSMEs to fully rebuild their business in this year.

Kinara Capital has recently launched the myKinara app. What was the need that you observed that made you launch an app? How is this app different from other fintech apps?

Our process has always been digital but initiated by our field officer who helps MSMEs to digitize their data for the loan application. Due to Covid, we noticed that tech adoption was accelerated with our customer base and motivated us to bring our backend tech to the frontend! We launched a consumerized version of our end-to-end loan process with our myKinara app. Many of our customers are willing today to fill out the form digitally on their own, upload KYC and related documents and even electronically sign for loan sanctioning.

Kinara Capital is all about making the process as simple as possible for our customer base. First and foremost, an MSME owner can simply check their eligibility without uploading any documents and get an instant answer in under a minute. This saves them a lot of time. Then, the myKinara app is accessible in vernacular languages and help is always a click away. An applicant has the flexibility to go back and forth between the mobile myKinara app and the web version of myKinara to continue their application from any point they left off – this is a feature that many of our applicants find particularly helpful when needing some time to pause and continue the process. Lastly, at any point, the applicant can reach out to our call center for help or request an in-person visit from more than 1000 of our field officers.

What is Kinara Capital’s growth strategy for the future?

More than 45% of MSMEs in the country are located in the states where we have a presence which include Karnataka, Andhra Pradesh, Telangana, Gujarat, Maharashtra, Tamil Nadu and UT Puducherry. Our focus is to continue serving MSMEs in our established geographies with plans to expand our reach in Tier 2 and Tier 3 cities. We also are seeking to expand our HerVikas program to support more MSME women entrepreneurs in the coming days.

As International Women’s day celebrated on March 8, what are some of the tips that you want to convey to budding women entrepreneurs?

More than 95% of women-owned MSMEs are not registered. My tips for budding women entrepreneurs in the MSME sector are first and foremost, you must formalize your business, this will help you get access to government schemes and other formal credit lenders. Secondly, it is very easy to mix the finances but it is imperative that separate bank and transaction records are maintained so that your business books show a clear track record.

For example, don’t pay for household expenses or children’s school fees directly from your business bank account. These are the types of things that should be avoided. Thirdly, build your credit history by opting to take a loan from a formal lender vs. only family. It is better for business growth in the long run as you can avail capital reliably once you have an established credit history. Seek out RBI-registered finance companies before taking any type of loan, whether personal or business.