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Capri Global offer small value business loans to a wide spectrum of clients in manufacturing, trade, retail and services sectors. Our vision is to empower the Micro and Small Enterprises by providing them timely and adequate capital and bring them into the formal financial lending system.

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Seeds of Change

Women are ambitious, determined, hardworking individuals, who deserve the opportunity to make their dreams come true. At Capri Global, we don’t look at women-entrepreneurs any differently than we see men. For more info visit: https://www.linkedin.com/pulse/seeds-change-small-big-impact-capri-global

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Importance of Home Security for the Low-Income Groups

When it comes to the development of an economy, housing takes center stage for reasons that include; the contribution of housing construction to the GDP of a country, employment generated, and the ripple effect it has on other sectors of the economy. The development of a country is marked by collective socio-economic wellbeing, not the wealth of a few.

In India, EWS and LIG form a significant proportion of our population and their untapped potential makes them a pillar of our economy’s growth. A report on the estimation of housing shortage by the Technical Group in 2012, found that the Economically Weaker Sections (EWS) and Low Income Group (LIG) accounted for 96% of the housing shortage in India. Recognizing the importance of affordable housing, the government has taken several initiatives to build homes for these groups including:

 Pradhan Mantri Awas Yojana (Urban)- A Mission launched by the government of India on 25th June 2015 which intends to provide housing for all in urban areas by the year 2022.

Pradhan Mantri Gramin Awaas Yojana-This scheme focuses on building one crore permanent homes with basic amenities for the homeless by 2022.

Rajiv Awas Yojna- An initiative that envisages an India free of slums. The scheme also delivers a financial provision of Rs 75,000 per EWS, for shelters that range between 20 and 40 sqm. 

 While these efforts have helped us inch closer to the goal, there are still several measures that need to be taken to ensure a more inclusive market:

Credit Linked Subsidies- While this subsidy has benefited thousands of lives, it hasn’t improved the affordability of homes. Potential homeowners, unaware of the scheme often overlook this subsidy when deciding whether to buy a home. A few small steps can help CLSs make a bigger difference:

o   A pre-approval process that guarantees the subsidy

o   Extending the reach to semi-urban locations

o   Doing away with the requirement for sanction plans for self-construction on small plots

o   Reducing the supplementary expenses such as GST, stamp duty, mortgage fees, etc

Extend access to credit to slums- In 2018, 14 million urban households lived in slums with poor infrastructure and difficult living conditions. Additionally, the opportunity to deliver home loans to this unaddressed market was estimated at ₹23,000 crores. Although there is a stipulated risk involved, it would benefit low-income households and the progress of the nation through a domino effect.

Incentives for developers- Although affordable housing has a macro impact, it also needs to entail a micro impact for the parties directly involved – lenders and developers.

Buying a home requires access to capital which is a need that has been ignored for too long. Contrary to the past when people depended on their retirement savings to build a house, people today don’t wait as long to set the wheels of owning a home into motion. 

Loans are no longer seen as a societal stigma that leaves you trapped in debt, but rather as an opportunity that triggers the cycle of progress for low-income families. Even people residing in Tier 2 and Tier 3 cities are seeing the benefits of loans when it comes to homeownership. HFCs and NBFCs like Capri Global Capital Limited, with specialized capabilities, require minimal documentation will have had a critical role to play in making the dream of housing for all, come true. Capri Global alone has disbursed 7855 + Housing loans towards the initiative so far.

Source URL: https://www.linkedin.com/pulse/importance-home-security-low-income-groups-capri-global

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Financial Inclusion: Lending to first-time borrowers

Although 55% of the banks opened globally were from India, 190 million Indians continue to be unbanked even today. Access to credit was identified as a key indicator of financial inclusion, but first-time borrowers are often deprived of this right. Financial lenders see first-time borrowers as an unnecessary risk and fail to address their needs.

A large segment of our society remains unbanked due to lack of financial literacy, gender inequality, poverty, and inadequate formal documentation. The need of the hour is a new dynamic where such borrowers aren’t discriminated against or at a disadvantage.

Here’s where NBFCs come into the picture and create opportunities for first time borrowers:

Data beyond a credit score- The verifications conducted by NBFCs before the approval of a loan go further than formal sources of information like a credit score. They consider social media verification or conduct community validation processes to verify a new borrower’s credibility. This helps them realize opportunities of good credit and puts them in a unique position to help their customer increase their credit score.

Deliver flexibility- Contrary to popular belief, when it comes to financial inclusion, one size doesn’t fit all. Years of studying the financial habits of poor households, their needs and behaviour has given us a little insight into how they manage their limited funds. This has enabled the delivery of financial services and solutions, designed specifically to meet their needs. NBFCs offer flexibility with regards to the principle amount, tenure, and rate of interest charged.

Customized solutions- NBFC like Capri Global select specific areas of focus such as MSME loans, housing finance, personal finance, etc. They leverage their understanding in combination with the technology at their disposal to deliver optimal solutions for their customers who are part of the financially weaker society.

Rural reach- Majority of the unbanked population of India resides within these boundaries, blissfully unaware of or unable to access formal financial services. The key difference that NBFCs bring to the table is their understanding of and ability to reach Tier 2 and Tier 3 cities. With digital picking up pace and a focus on collective progress, these NBFCs have stepped in to help fill this existing credit gap.

Assistance throughout the journey- Some NBFCs go beyond granting the unbanked access to financial services to giving them the support. Ones like Capri Global also provide legal and financial advice that helps them navigate their financial decisions.

Post an examination of the prevailing trends, we can clearly see that loans are no longer seen as a societal stigma but a medium through which individuals can fulfil their aspirations. The general public is more open to the idea and are willing to give formal finance a chance, only if the get access.

Capri Global is an NBFC that believes in giving people the opportunity to trigger change for themselves and improve the standard of living for their families. The financial institution delivers MSME loans and housing finance to the underserviced segments of the society with a special focus on Tier 2 and Tier 3 cities and a vision to eliminate gender disparity. While such NBFCs have helped India come a long way, we still a long way to go before we call ourselves a financially inclusive nation.

Source URL: https://www.linkedin.com/pulse/financial-inclusion-lending-first-time-borrowers-capri-global

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Powering the entrepreneurs who power the economy

The Indian business landscape boasts numerous success stories of entrepreneurs and MSMEs. These are shining examples of passion, courage and business acumen shaping the future of India. In many ways they are powering the growth engine of this economy.

In keeping with our commitment to opening doors for MSMEs, Capri Global provides these game-changers the financial assistance they need to expand their businesses. For us, it is more than a question of providing loans. We are proud to be part of a movement that empowers visionaries and that our efforts complement MSMEs in their contribution to the government’s ‘Make in India’ mission. Here’s how we levelled the playing field for MSMEs seeking loans:

Unlocking new opportunities

According to data compiled by CIBIL’s MSME pulse report, only 16% of MSMEs were financed by the formal banking system. The funding gap for the Indian MSME sector currently stands at a staggering Rs 16.66 lakh crore and Capri Global is committed to bridging this divide. We see our mission as one of creating new possibilities for our customers through the loans we provide.

To bring MSME entrepreneurs closer to their goals, Capri provides credit based on a rich understanding of each business from a local and social standpoint.

By enabling easy and transparent funding to start-ups, Capri MSME loans have enabled numerous new opportunities.

Making it easy for those who know their true calling

Our services span across eight states, with 1800 professionals dedicated to simplifying the process and helping MSMEs scale new heights. that’s built-to-suit first-time entrepreneurs. We deliver ease of access to MSME loans, with the eligibility criteria built-to-suit first-time entrepreneurs. Our robust, fast-pace loan process that has helped about 61% of our benefactors. These are first generation entrepreneurs, who were earlier unable to access credit due to lack of security. Nearly 53% of them started their careers with our loans. We currently have an active borrower base of over 15,000 businesses with an Average Ticket Size of INR 15 Lakhs from enterprises ranging from trade to restaurants and small manufacturing units to private schools.

Enabling women entrepreneurs to make their mark

We understand the pulse of the market and know what women entrepreneurs need. Often, due to the unique demands of the industries they specialize in, they need additional credit and support. However, getting timely funds from MSME finance companies can become especially challenging for women entrepreneurs.

Capri Global ensures customised service through various features in its lending model that grant the flexibility and support SME women entrepreneurs in India. Thanks to the efforts of our employees on ground, 15% of the businesses supported by Capri Global are today led by women.

Capri believes in fostering and nurturing the entrepreneurial spirit. By providing loans and facilitating the process to Indian entrepreneurs, we hope to help them achieve their goals. It is an expression of our belief – that profit and purpose can be achieved together to drive a positive change for humanity.

Source URL: https://www.linkedin.com/pulse/powering-entrepreneurs-who-power-economy-capri-global

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Health of the NBFC Sector, and Why it Matters!

Economic growth in the dynamic world we live in, depends to a great extent on start-ups and their progress. The optimistic goal of attaining a $5 trillion economy by 2024, presented by the NDA government, will only be possible if the MSMEs contribution to the GDP grows to 50% from 29%. Whether to meet operational expenses or make capital ones to grow their businesses, these MSMEs count on the credit they receive from various sources. Even with a number of loan schemes set up to meet their needs, the sector faces a Rs 16.66 lakh crore credit gap.

The NBFC sector hope to bridge this gap through customised products that are built based on a deep understanding of micro markets in tandem with the advances in technology that enable data driven unwriting models at risk-based prices. They service 20% of their credit needs today but the liquidity crisis that hit the sector could prove to be a challenge to this credit growth.

Apart from supporting the growth engines of our country, NBFC sector in India drives financial inclusion and contributes to nation building in many other ways:

Delivering investment opportunities- NBFCs help individuals convert surplus funds / savings into investments. The liquidity woes that followed the IL&FS default have led to the common misconception that all NBFCs are a credit risk. However, investing in an NBFC can be a safe bet if you take the necessary precautionary measures. It is critical to consider the companies’ credit rating, assets and liabilities, and its overall stability before you invest.

Creating jobs and boosting employment- Much like a ripple in the water, the impact of NBFCs isn’t restricted to the immediate lives they touch. They provide access to credit to organizations across the board that would consequently boost human capital requirements.

Attracting FDIs- More than money, it’s the opportunities created. The funds that NBFCs pump into Indian companies help them grow and get noticed by investors both within the country and beyond every boundary.

Customised solutions and services- The credit delivered opens doors for the underserved. It’s looped cycle where NBFCs convert savings into investments, investments into loans, which are then converted back investments but in a different form. The flexibility, speed and lenience they offer, enables the flow of credit to financially weaker individuals and organizations who are unable to get loans from other formal sources of credit.

Improving market capitalization- The finances disbursed by NBFCs also help boost the valuation of listed, publicly traded firms.

Facilitating loans to core sectors- NBFCs also target and serve industries such as infrastructure, transport, power, etc. that involve longer tenures. They offer tailor-made solutions that meet the needs of these borrowers.

NBFCs have become one of the key vehicles for the mobilization of funds among the underserved audience in India. NBFCs are a crucial part of our financial system and the well-being of the sector could be the difference between getting to or falling short of the 5 trillion finish line. Although they sector seems to be unsteady at the moment, a number of institutions like Capri Global continue in their steady march into the future with technology at the helm.

Source URL: https://www.linkedin.com/pulse/health-nbfc-sector-why-matters-capri-global

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Role of NBFCs in generating employment opportunities by supporting the MSMEs

India’s meteoric rise as an economy has indeed been incredible. As one of the fastest growing nations in the world, India has many traits that hold it in good stead when it comes to growth. A highly skilled population with a high aptitude for technology, a culture of innovation and a shift towards entrepreneurship. One of the biggest reasons for India’s unprecedented growth has been the success of the MSME sector.

A new generation of entrepreneurs have brought about a seismic shift in the business landscape. Today, most youngsters dream of running their very own company rather than aspire for a traditional job. These capable men and women have created successful businesses that provide a wide range of MSME jobs to millions of people. Last four years alone, the MSME sector added as many as 14.9 million jobs.

The MSME sector has helped generate jobs for people from many walks of life, such as:

The rural sector: States such as Gujarat thrive due to many small     companies that deal with textile, production plants and more. Many of     these companies hire people from rural parts of India to fulfill their     requirements, thus helping people generate income and grow. The rural     sector is where a majority of India’s population lies. Making the role of     MSMEs extremely vital. Here’s more on how much MSMEs have impacted the rural sector.

Skilled labourers: As these companies push for expansion, skilled     labour benefits the most. The need for talented employees that help meet  requirements lead to a surge in hiring for skilled labourers who thrive in     these settings. Sometimes these talented individuals start companies of     their own, which helps generate even more jobs for the economy.

Start-ups: The sudden rise of the start-up culture in India has led to more and more people starting companies and as a net result hiring more   people to help them grow and achieve scale.

 But, when it comes to financial support and creating employment opportunities in India, where do these budding businesses go? Traditional banking institutions are often less than ideal. The answer lies with India’s Non-Banking Financial Companies sector.

 NBFCs help MSMEs flourish

 For years now, NBFCs have been the bedrock upon which MSMEs have grown. They have been paving the way for these companies to hire skilled professionals who in turn grow with these companies. The impact that NBFCs have had on the growth of MSMEs is truly remarkable.

The role of NBFCs in moulding these micro, small and medium level enterprises is crucial. It is the means by which many of these institutions grow their business, thereby increasing their capabilities. This ultimately leads to a demand for a bigger workforce, which in turn leads to a surge in employment. When factoring in how many MSMEs operate in India (63 million), one begins to understand the importance of NBFCs to millions of families and their livelihoods.

Now imagine if these companies couldn’t get loans to expand their business or maintain day to day operations. The implications would be huge. When they are unable to raise funds, these companies will now find it hard to hire people and as a result, unemployment rises and the GDP growth of the country falters. As you can see, this is a less than ideal scenario for a country like India and for the millions of people who rely on the MSME sector for their job security.

NBFCs have always been the easier source for these smaller companies due to a variety of factors such as quick deployment of funds, better interest rates and a much more flexible eligibility criteria. This is also why they make for a great investment option. As more and more MSMEs look to grow, there is a great case to be made on why you should invest in NBFCs.

As India looks to create better job opportunities for its citizens, look for more MSMEs to create employment opportunities with the aid of NBFCs. As long as MSMEs have the room to grow and generate jobs, India’s future is indeed bright. If you are one of many MSMEs in India looking to apply for MSME loan, here’s a look at how you can get an MSME loan.

Source URL: https://www.linkedin.com/pulse/role-nbfcs-generating-employment-opportunities-msmes-capri-global

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How has Technology Redefined MSME Lending?

Differentiated underwriting, customized offering, flexibility, and fewer criteria for MSME loan eligibility are but a few reasons that make NBFCs a better choice for small organizations. Findings revealed that NBFCs demonstrated the lowest turnaround time for MSME loans which fell from 24 days in 2014 to 18 in 2018. (Stats from Economic Times)

As the most dynamic and promising sector today, MSMEs need easy, quick access to credit. With over 60 million MSMEs in India and a lending potential of 100bn that banks are unable to meet, they are forced to turn to informal sources of credit to finance their needs. There’s a wide gap between the demand and supply of credit in the MSME sector and NBFCs are well on their way to bridging it.

Technology and its uses have seeped into every industry across the board, each to different extents. The NBFC sector is no exception. Whether it’s the digitalization of documentation for paper-free processes or harvesting intelligence to deliver an exceptional, seamless experiences. The time has come for the leaders of change to adopt and implement technology to improve efficiency, accuracy, and speed and deliver value to their customers.

Against all odds, public deposits in NBFCs increased from $293.78 Mn in FY09 to $4.95 Bn (INR 319.05 Bn) in FY18.(sourced from Inc42, link mentioned) And, it might just have been the new financial technologies being leveraged that are responsible for this growth. Many NBFCs are strategically targeting this underserved market and leveraging technology to meet their needs. Let’s find out how tech is changing the MSME lending landscape:

Risk assessment

In the past, NBFCs depended on collateral and physical documentation to assess the creditworthiness of a small business. The birth of the internet and the domination of technology today has facilitated access to a wide range of formal and informal sources of data. It draws a clearer picture of the small business’ financial standing and allows financial institutions to assess their eligibility and take a call on whether the application should be approved or denied. This gives small businesses, with little to no formal proof of profit, the chance to become credible borrowers.

Documentation has gone digital, and processes online. While the migration of data to the cloud helps improve accuracy and speed of response, it inadvertently opens the organization up to a number of cyber threats. NBFCs must take the security measures necessary to safeguard their customer data, while they optimize the use of tech to simplify risk assessments and other operations.

Loan application process

Gone are the days when MSMEs needed to fill out a multi-page loan application or be present at a fixed location. Financial services technology has simplified the process to the extent of a few clicks. Additionally, it has the capacity to identify potential shortcomings related to the repayment of the debt and takes a call on whether to approve or deny the loan, almost instantly. The repayment process has also been simplified through the usage of UPI payment gateways that lets you pay both the principal and interest online.

Earlier the options available to MSMEs were limited by location, collateral, time, interest, etc. Technology gives customers access to lenders that were once out of their geographical reach and vice versa. NBFCs can now reach rural markets and provide services to the financially weaker and unserved markets like never before.

Challenges Faced

Technology is no longer the way of the future, but the way forward today. NBFCs that fail to recognize this critical shift, run the risk of extinction. Transformation is not possible overnight, it takes years of planning, implementation and course correction. There are a number of challenges faced by NBFC on the journey towards a digital tomorrow, some of which include:

Capital Intensity- Digitalization is a capital-intensive investment that a number of NBFC are unable to afford or unwilling to create a budget for. Many of them fail to see the potential impact and fear that it might be a risk too big to take.

Time and Man-power- Transformation is a time and effort consuming process that some NBFCs are unable to accommodate.

Stability- The NBFC market is currently in a state of influx, where most players are at a loss about what to do next.

The changes mentioned above have simplified processes, boosted the flow of credit and enhanced the overall loan experience for the MSME sector. It has also allowed financial institutions to launch MSME schemes that are customized to meet their needs. As one such NBFC, Capri Global is dedicated to empowering them with the finances to sustain and grow their businesses.

The contribution of the MSME sector to the GDP of India and the lending they receive from NBFCs, are both undeniable. Technology has become the stepping stone into the future and NBFCs that want to not just survive but win down the line have no choice other than walking the tech tight rope.

Source URL: https://www.linkedin.com/pulse/how-has-technology-redefined-msme-lending-capri-global/

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How are NBFCs championing women in business

India has come leaps and bounds since the abolishment of the caste systems and archaic traditions like the sati. But although the days when girls were deprived of an education or a life independent of her spouse are nearly out of sight, discrimination continues to be a widespread social issue across India, even today. While India claims to be developing at a rapid pace, the minute a girl crosses 25 the only question that crosses most people’s mind seems to be “When are you getting married?”.

Women, filled with ambition, drive and dreams walk our city streets each day, with the world at their fingertips and more than a few challenges ahead. Your modern Indian woman is no longer restricted to what’s believed to be any woman’s ultimate goal- getting married and bearing children. They dare to dream of an education that unlocks opportunities beyond working for someone else to starting something of their own.

Women, who could be sitting on a million-dollar business idea, without the financial means to make them a reality. Their bank loan applications are often rejected for reasons like insufficient security, lack of documentation, proof of income, etc.  Non-banking financial companies, on the other hand, have the flexibility and transparency necessary to deliver financial services to the financial weaker sector and more specifically women.

Women- The Next Opportunity for NBFCs

While access to education and opportunity received by women has grown significantly in the past decade, participation in the labour force has fallen from 36.7% in 2005 to 26% in 2018. Whether we attribute these number to unfair wages or unemployability, it remains an issue that’s yet to be addressed.

10% of businesses in India are run by women, with 78% of them operating in the service sector and 98% being classified as ‘micro’ enterprises. Consistent flow of credit is critical growth of this segment which has resulted in the 300,000 billion dollars gap that hinders progress. Today, women are more dexterous than ever, with an abundance of small business ideas, the knowledge and skills required and with the support of government schemes and financiers like NBFCS, the capital to get it started.

Actioning Support- Micro Finance makes a Mega Difference

The empowerment of women goes hand in hand with financial inclusion, while financial independence is the goal that wafts the flame. Women, each in their own capacity strives towards this goal today with micro financial institutions enabling their achievements. Let’s take a look at what makes NBFC the go-to source of credit for women in business:

Flexible interest and tenure of repayment- Women with loans don’t just need to consider the funds needed for their business, but the needs of their family for food, shelter, clothing, etc. As such, adhering to strict deadlines can prove to be a problem. Contrary to the traditional banking system, the interest due on the principal and time taken by the borrower for the repayment of the loan can be customized to the individual’s needs.

Minimal documentation- Whether a woman has chosen to path of a homemaker, or simply doesn’t have adequate documentation for a loan, it knocks them out of the running for a loan from formal sources. Loan application in most formal financial institutions is a lengthy, tedious process that involves heaps of documentation. Documentation that includes income statements, credit scores, security, etc, that the economically weaker often don’t have.

Fast processing and disbursal- Acquiring funds in a timely manner is another aspect that makes NBFCs a tempting source of credit for women. The time take between approval and disbursal of loans is significantly less than other forms of credit. NBFCs like Capri Global also guide their customers throughout the process to empower them to unlock their potential.

According to CIBIL, 8.6 million women get access to their first credit each year and hold an excellent average credit score of 781. The report also found these loans to be 15% more profitable than loans given to men. Women today share the financial burden of putting bread on the table and are quickly becoming the principal financial decision-makers. NBFCs see this as an opportunity to empower women who want their small ideas to make a big impact. They hope to serve this underserved segment and bridge the deficit in the flow of credit into some of the best ideas for businesses for women.

Source URL: https://www.linkedin.com/pulse/how-nbfcs-championing-women-business-capri-global

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Future-Ready Firms Turn to Tier 2 and Tier 3 Cities for Growth

Even as a developing nation, economic growth, and opportunities across the major cities are now well on their way towards being saturated. And, what happens when the fastest growing cities in India aren’t developing as fast anymore? No. This doesn’t mean the end of development or progress but rather a chance to go beyond Tier 1 and into Tier 2 and Tier 3 cities that have the potential to make a real difference. Future-ready businesses have not failed to see and seize this opportunity.

It’s time to shift focus from the 300 million that are already aware, to the 500 million that have been ignored all these years. India has the second-largest number of internet users with the numbers reaching a staggering 563 million. Retail, IT and housing finance organizations are among the pioneers to capture these untapped markets.

Why MSMEs are turning to Tier 3 and Tier 3 cities

The MSME sector contributes to over 45% of the industrial output and 40% of the country’s exports. The entrance of these players in these under-served markets will back the urbanization of rural India. Here’s why the sector has shifted their focus to these cities:

Lower land cost and rent charged- Investment necessary to set up shop in a smaller city is generally significantly less, when compared to metros. There’s more land and rental space available at a lower cost.

Availability of talent- Gone are the days when the cream of the crop needed to leave their home towns in search of better education, better jobs or a better life. Today, thanks to the connectivity that technology has brought in, millennials have started returning to their home-towns upon completion of their formal education. Talent is presently easily available in these cities with lower salary slabs.

Widen customer base- Many MSMEs address problems that are geographically agnostic. Entering these markets serves as a way to create networks, feel the pulse of the cities and produce goods and solutions that meet their needs.

Loans- The Foundation for Growth

MSMEs today contribute to over 25% of the country’s GDP and this number is only set to rise. They create an abundance of opportunities for growth and employment in the nation but need the funds to do so. Loans help these organization meet their capital and day-to-day expenses. Banks are presently able to meet only 40-70% of the MSME sectors financial requirements that account for $55 bn in the present.

So where should they turn to bridge this gap?

NBFCs are the answer. Non-banking financial institution in India are an optimal source for MSME loans because they have tailored offers for the sector with certain allowances that make them a more flexible, viable option. The terms of interest and repayment NBFCs offer are also personalized to serve the underserved and ensure the flow of credit in the economy.

In the long- run the progress of a nation depends on the well-being of the whole and not just a few parts. For India to continue on the path towards being a developed nation, organizations must go beyond the big cities and execute change across the country.

How Capri Global is Capitalizing these markets

As a leading NBFC in India with a focus on urban development, Capri Global Capital Limited hopes to lend over Rs 7,000 crore by providing home loans and MSME loans in these smaller cities. The company sees the need to create a network of branches across and plans to expand its operations from 84 to 232 branches in the next five years.

Although the liquidity crisis of 2018 sent the NBFC sector into a bit of a slump, Capri Global managed to achieve a growth of 45% and has confidence that the books this year will also reflect a similar level of progress. During an interview with ET Now, Rajesh Sharma, Managing Director of the firm addressed the fact that each city is different, and an understanding of these variations is what will give them an edge in

Tier 2 and Tier 3 markets

.Source URL: https://www.linkedin.com/pulse/future-ready-firms-turn-tier-2-3-cities-growth-capri-global

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Why Should You Invest In A Non-Banking Financial Company?

While it is undeniable that money makes the world go round, it’s what you do with it that truly makes a difference. Money management is a tricky business because portfolios differ from person to person, based on the resources available, options they have access to and knowledge of, and their willingness to take a risk.

In a utopic world, doubling your principle with little to no risk would be the obvious choice. However, the reality is that greater the risk, greater the reward. While playing it safe guarantees a fixed return, a little risk can go a long way. Creating a comprehensive portfolio is all about knowing the investment opportunities in India and finding a balance that works for you.

Post the IL&FS crisis, liquidity woes have made NBFCs a credit risk, but not for all. Before you completely write off non-banking financial companies in India, it’s important to take into consideration the institutions’ credit rating, assets and liabilities, the buzz about it and its overall stability. Let’s take a look at some of the reasons you should invest in an NBFC today:

Contribute towards the wealth of the nation- In the past, non-banking financial institutions have performed better than banks and will resume to do so once the storm blows over. They grant access to financial services to the rural, weaker, and underserved segments of the economy including MSMEs that contribute to over 29% of India’s GDP. They have been instrumental in enabling economic development through capital formation and subsequent GDP growth. Although they aren’t the most popular choice currently, they will continue to serve as a relevant part of the economy in the years ahead.

Fall in stock prices- The liquidity crisis in 2018 resulted in the dip of the stock prices of most NBCFs, making them available at a lower cost. As with equities, investing in an NBFC takes a little knowledge and skill because picking the right company is as important as the time you buy it. This is but a temporary set-back that gives investors the golden opportunity to purchase shares at a low price. Although the credit risk involved has risen, investors continue to cautiously invest in them and expect positive returns.

Budget 2019- According to the Union Budget of 2019-20, the government will provide a one-time partial credit guarantee to public sector banks to buy high-rated pooled assets of financially sound NBFCs. The inability of a few has not just reflected on but affected the financially sound NBFCs and resulted in an unjustified risk aversion to them. The Union Budget of 2019 established this provision to give investors the assurance that their money is safe non-banking financial companies the opportunity to win back their credibility.

Risk-Return relationship- When we speak of the inverse relationship between risk and return, we are referring to risk that is calculated, not blind. The risk you take shouldn’t outweigh the potential returns that you stand to gain. NBFCs have become an important part of the economy and have proved their performance in the past. The government has upfronted 70,000 cr to banks as capital support and has allowed NBFC to use KYC from banks to speed up the loan process. This backing research about the company prior to the investment will act as the safety net for your investment. Upfront liquidity support of Rs 70,000cr to banks will benefit NBFCs This not only makes an it a calculated risk but an avenue for substantial returns. The market might be in a slump in the present but that just presents an opportunity for growth for at least the next 15-20 years.

FinTech shaping the landscape- Banks aren’t the only financial institutions in India that are leveraging tech for growth. Today, it’s digitalization that underpins an NBFCs ability to personalize their offerings and meet the specific need of a larger audience. Data and artificial intelligence are also being used by both NBFCs and their investors to assess the market and stability, respectively. Emerging technology has given NBFCs increased visibility into the journey of the customer and their own processes, enabling improved accuracy and the elimination of manual errors.

 All things considered, NBFCs continue to be a great investment option in India that should be part of your portfolio. It is important to assess the financial liquidity of the company you’re investing in and understand their scope of growth. The transparency granted by NBFCs to investors also adds to their credibility.

As an upcoming, diversified NBFC, Capri Global has created the optimal mix of borrowing and lending and are leveraging automation to improve productivity, while also controlling costs. With presence across high-growth segments such as MSME, Construction Finance, Affordable Housing, and Indirect Lending and 1,800 employees across 88 location, the organization hopes to create a solid social impact through the facilitation of flexible and intuitive loan products.

Source URL: https://www.linkedin.com/pulse/why-should-you-invest-non-banking-financial-company-capri-global

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What is an MSME Loan and How to Get It?

Micro, Small and Medium enterprises might seem trivial, but their contribution to the GDP of our country proves otherwise. A study by SIDBI found that MSMEs contributed to 29% of India’s GDP in 2017 with a vision of increasing it 50% in the next 5 years. And the availability of funds and access to credit is central to making this dream a reality.

MSME loans are loans offered by banks and NBFCs if a candidate meets the eligibility criteria. They are loans customized to meet the specific needs of startups and MSME loans for new businesses looking to expand. The loan duration and interest rates differ from lender to lender, based on the principal amount borrowed and credibility of the borrower.

Every other day, we receive cold calls from banks asking if we’d like to take a loan and we politely decline. MSMEs on the other hand, don’t have it so easy. Even today, 40% of the funds lent to them are through informal sources, that often charge hefty interest rates, making payment a cumbersome burden resulting in default payments and consequently a lower credit score. Although the government and its initiatives have gone a long way, getting a loan continues to be quite the challenge. Some of the hurdles in their paths include:

·         Inadequate Data- Lack of information results in lack of action. Formal credit ratings and lack of data used for risk assessment often forestall the loan process. Lenders, as a result, are unable to asses the MSMEs’ financial standing and ability to repay the debt.

·         Security Collateral- More often than not, small organization lack the collateral and assets that can be leveraged while taking out a loan.

·         Regulatory Restrictions- Compliance to regulations set by the government with regards to the eligibility also inhibits the flow of credit into the hands of MSMEs.

·         Documentation- Most formal sources of credit involve long processes and the need for a number of documents of proof, forcing small enterprises to turn to informal sources.

·         Time- During the initial phases of starting up a business, most of the profits earned need to go back into the business to sustain or grow their business. While an SME might take a longer time to pay back a debt, this doesn’t necessarily make them defaulters.

Now that we understand the challenges faced by MSMEs, it comes as no surprise that they are an underserved market. They need a source of credit that is willing to give them a little leeway with regards to documentation, time, interest, etc. So, how do you get an MSME loan when it seems like everything just gets in the way?

See an opportunity, grab it. And, that’s just what NBFCs did to tap into the MSME loan market. Let’s take a look at how non-banking financial companies have simplified the lives of and loans for MSMEs:

Data Differentiation

There’s data in everything and where there’s data there’s insight. Insights that enable differentiated credit underwriting. NBFCs leverage both formal and informal sources of data to assess the credibility of the borrower and decide if the risk should be accepted. They take into account cash flows, debt history, industry risks, and other aspects that might factor into the repayment of the loan to gauge their MSME loan eligibility.

Product Personalization

Regardless of which industry you’re talking about, a one-size-fits-all approach doesn’t work anymore. NBFCs grant MSMEs the flexibility and funds they need to meet their needs. This flexibility extends into the principal amount borrowed, cost of each instalment, total duration of the loan and the option to choose between a fixed or floating interest rate.

Time Taken

In the past, the turn around time from the application of the loan to the actual disbursement of the amount took a significant amount of time. Delays in meeting the immediate needs of an MSME could be the difference between its progress or closure. NBFCs have cut short the turn-around time and presently take between 7-15 days to process loans, once all the other requirements are fulfilled.

Tech Transformation

In the digital era where convenience is at the core, processes need to be streamlined to the click of a button. FinTech has come a long way in simplifying transactions, not just for banks but for NBFCs, as well. Whether the MSME is in search of information, wants to check their eligibility, apply for the loan or even make a payment, it’s all possible right at their fingertips.

MSMEs present an additional lending potential of $70 billion, and NBFCs are quickly becoming the go-to source for these loans. Capri Global is one such NBFC that’s identified the gap between the finances need by and granted to this segment and offers loans up to Rs. 50 lakhs as the first step to bridging it. To empower MSMEs to expand their businesses and reach their potential.

(Source Link: https://www.linkedin.com/pulse/what-msme-loan-how-get-capri-global/)