Kinara Capital: Building financial inclusion for businesses in India

Picture this: Manju recently started his own business of creating bicycle parts with the hope of a better life for his children. He began the process by selling his house to purchase the machine that would manufacture the bicycle parts. To run the business efficiently and increase revenue, he soon realized he would need to purchase a second machine. With no funds of his own, Manju decided to explore external financing options, but his bank refused to give him money as his business was only eight months old and the perceived risk was high. Other financial institutions turned him down due to lack of collateral and some wanted 60 percent interest on the loan amount.

This could be the story of any of the micro, small and medium businesses (MSMEs) in India that are started by first-generation entrepreneurs, who are mostly unskilled or semi-skilled workers. Today, there are more than 30 million MSMEs in India, employing more than 70 million people. But MSMEs are in dire need of financing because of longer working capital cycles and higher capital expenditures. Banks and microfinance institutions often face restrictive policies and regulatory challenges that prevent lending to these businesses.

Enter Kinara Capital, a fast-growing Non-Banking Financial Company (NBFC) that offers loans to MSMEs that do not have access to traditional collateral. Kinara provides flexible livelihood loans to the urban poor in India, within seven to ten days. Kinara leverages psychometric testing of the borrower and cash flow analysis of a business, along with customer-centric processes and supply chain integration. Kinara started in 2011, and today offers loans ranging from $2,000 to $20,000 in several states across India.

Because of the loan he received from Kinara, Manju now runs a successful business – he has added new machines, increased the number of employees from four to seven. His revenue is up by 35 percent, and he has made plans to set up a new manufacturing unit which will be run by his son.

The Michael & Susan Dell Foundation invested in Kinara Capital as we strongly believe in the vision of its owner, Hardika Shah. Hardika believes in creating a financially inclusive community so that micro and small entrepreneurs, the core engine of job creation in India, have a chance at success.

The Michael & Susan Dell Foundation invested in Kinara Capital as we strongly believe in the vision of its owner, Hardika Shah. Hardika believes in creating a financially inclusive community so that micro and small entrepreneurs, the core engine of job creation in India, have a chance at success.

Over the past six years, Kinara has reported a 20 percent increase in average entrepreneur income among it’s 8,000+ customer base. The organization has also helped generate one new job for every two loans it lends to the MSME sector, thereby creating greater social impact.

Kinara recently won the audience choice award at The Wall Street Journal’s Financial Inclusion Challenge 2017 – a platform to showcase innovative and scalable solutions that help the underserved in the Asia-Pacific region build financial stability.

All in day’s work for Hardika and her team, who continue to work relentlessly to ensure they are a vital support for entrepreneurs, helping them move up the value chain and getting them a step closer toward realizing their dreams.