Lessons as a lender: How FlexiLoans was conceived and grew in scale  

Enthused by a strong wave of India’s march in the areas of Jan-Dhan (Banking accounts), Aadhar (KYC solutions) and Mobile (contactability/ alternate data), Ritesh, Deepak and I (classmates from Indian School of Business 2009) started FlexiLoans.com in 2016 to serve the deserving yet unserved micro and small businesses across India using data-backed credit underwriting and technology infrastructure for superior customer journeys.

When we met our first set of e-commerce and merchant platforms for distributing business loans digitally using surrogate data within 48 hours, we were welcomed with a red carpet. Our prospective investors/ lenders, however, wanted to see the traction and credit behaviour giving us the first lesson that in lending risk is rewarded more than book growth and potential.

Soon, FlexiLoans became one of the leading lenders for e-commerce sellers selling on platforms such as Shopclues, Snapdeal, Flipkart, Amazon, Paytm, and many more. During 2016-17, Indian MSMEs witnessed 2 big macro changes: a) demonetisation; and (b) Introduction of GST regime — pivotal changes for the Indian small businesses.

We developed surrogate underwriting models based on POS pay-outs, e-commerce sales that ensure seamless delivery of credit and data-backed eligibility computation for loans, which was unheard of till then. Covid period from year 2020-22 further spiralled the digital adoption of the Indian businesses, and today we receive over 3.5 lakh monthly applications and over 10 lakh monthly visits to our digital platforms. The lesson learnt here is that India is a very large underserved and high potential market, waiting for disruption in lending by category defining lending companies like FlexiLoans.com that leverages data and technology to service the loans viable

During 2019, Indian NFBCs suffered a huge setback post PNB and ILFS crisis where the funding literally dried up and sanctions which would take a few weeks to get disbursed started taking months. We learnt a tough lesson then that liability and liquidity management is one of the trickiest and a core task at Lending and if not set as a disciplined process, can hamper growth. We developed co-lending solutions for our customers along with a few prominent banks and NBFCs and these came very handy in 2021-22 when funding scenario for lending was again tight owing to covid but 70% of our AUM growth was catered seamlessly by our partner lenders via our co-lending platform. Our liability franchisee is today diversified with over 25+ Banks and FIs lending to us directly and multiple co-lending partners.

Lastly, the COVID period was a true test for any lender and we learnt the virtues of empathy, communication and technology in our Collection efforts. We kept in constant touch with our customers, expanded our reachability to the customers, restructured their loans at a customer level understanding and landed at credit costs of <5% even during the Covid years and least customer escalations. We used technology tools to remind customers, get payments and update them on their track records.

In summary, the last 6+ years have seen one of the toughest macro economic environments for Indian MSMEs but at the same time, saw the Indian Digital Stack gaining enormous strength aided by regulatory support. We are now amongst the leading Fintech Lenders in the country with over ₹1,000 crore of AUM, over ₹4,000 crore of annual disbursement run rate and amongst the few profitable fintechs supported by the trust and support of our valued customers and stakeholders. In lending, one is judged by the ability to grow risk sensitivity than loan book.

Manish Lunia is the co-founder of FlexiLoans.com