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Lendingkart gets debt funding of Rs 300cr from Aditya Birla Sun Life AMC & others

Lendingkart Finance Limited has raised debt funding of Rs 300 crore from Aditya Birla Sun Life AMC and other undisclosed investors, reports PTI.

It is common for lending companies to raise debt funding to replenish their loan book. PTI report mentions that the company will use fresh funds to growing its loan book and finance more MSMEs.

Debt funds are different from equity funds. A debt fund may invest in short-term or long-term bonds, securitized products, money market instruments or floating rate debt. On the other hand, an equity fund is a mutual fund that invests principally in company stocks.

Lendingkart is a non-banking finance company (NBFC) that provides small business loans ranging from Rs 1 lakh to Rs 40 lakh on its platform to SMEs. It claims to sanction them in a day and disburse within three days. The loans attract an interest rate of 16-24%. According to company’s website, Lendingkart have disbursed about 28,000 loans to more than 12,500 MSMEs across 950 cities. The company aims to add 20,000 new MSMEs and disburse 30,000 loans in FY18-19 across 1200 cities across India, according to PTI report.

Lendingkart’s funding spree

  • In February, it secured Series C funding of Rs 565 crore (approx US$87 million) in equity funding led by Singapore’s Fullerton Financial Holdings Pte Ltd (FFH), along with existing investors.
  • A month before Series C, Lendingkart raised Rs 30 crore debt funding in the form of NCDs or non-convertible debentures, which are unsecured bonds,  from Dutch development bank Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (FMO).
  • In the same month (January, 2018) Lendingkart Finance received a debt funding of Rs 25 crore from State Bank of India (SBI) to further grow its loan book.
  • Prior to that, in September last year, the company raised $10.51 million (~Rs 70 Crore) in equity funding in September 2017.
  • It raised $10 million in debt funding in August 2017, and
  • Another Rs 50 crore of debt fund from Yes Bank and another $12 million debt funding during its B round in June.
  • According to this Livemint report, the company had previously raised an undisclosed amount in debt from DCB Bank Ltd, though it doesn’t specify when this deal took place.
  • In July  2015, it raised $10 million from multiple investing firms and individuals for enhancing its technology stack and firing adding new talent.
  • Lendingkart also raised Rs 3.8 crore in a seed from a cluster of investors in 2015.

RBI’s guidelines on P2P lending

All the digital lending platforms are regulated by Reserve Bank of India (RBI) as NBFCs. RBI had come out with final guidelines in October 2017 for peer-to-peer (P2P) lending platforms, according to which P2P lending companies will be regulated as non-banking finance companies (NBFCs) and will come under the purview of the RBI. According to the guidelines, the P2P platforms will act as only as an online intermediary and not raise deposits. These platforms will only act as a facilitator between different parties, and cannot provide any credit enhancement or credit guarantee. The RBI also directs that these companies cannot cross-sell other any product except for loan specific insurance products, and are not permitted international flow of funds.

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