India is home to over 63 million micro, small and medium enterprises (MSMEs), many of whom had to pivot to new business models to survive the coronavirus pandemic. And there have, of course, been the unlucky ones who had to shut shop entirely due to their cash reserves totally drying up. The MSME sector is considered the backbone of the Indian economy, and thus it’s no surprise that the revival of the two are deeply inter-linked. A recent survey showed that 50 percent of MSMEs have seen a 20-50 percent impact on their earnings due to disruptions caused by COVID-19.
In this backdrop, several digital lenders have stepped up to help the sector, especially hand holding them through the process of digital adoption, which is still new to many small businesses.
Bengaluru-based startup Capital Float is one such player, doing its bit to help the MSME sector out of the woods. Founded in 2013, by Stanford MBAs Gaurav Hinduja and Sashank Rishyasringa, the Reserve Bank of India (RBI) registered NBFC (Non Banking Finance Company) has disbursed over Rs 8,000 crore in loans across 314 cities so far.
“In April, when the country was locked down, our first reaction was what do we do, how do we actually handle this? And our collections efficiencies fell to about 50-55 percent in April-May. But the moment Unlock 1.0 happened, our team jumped back into the field, got close to the customer, and started figuring out who was doing well and who was not, and gave them moratorium in a thoughtful way such that we were actually able to get back to 85-86 percent collections efficiency.
“We find ourselves, almost to our own surprise, having one of the best collection efficiencies among our peers at this moment, whereas a year ago, this was not something that was even on our radar,” Sashank Rishyasringa, Co-founder and MD, Capital Float tells YourStory Founder and CEO Shradha Sharma during a chat in July.
Watch the full interview here: