BharatPe plans to lend Rs 7,000 cr, become 'bank for all' small businesses

Sequoia-backed firm, which is set to become the next unicorn, provides payments technology and digital lending to traditional businesses.

Suhail Sameer, group president of fintech company BharatPe, doesn’t shy away from praising competitors including Razorpay. “Razorpay is a great business, I love it,” said Sameer. “They are one of the most credible fintech players in India.”
 
His company BharatPe provides payment technology and digital lending to offline businesses, including kiranas.
 
The Delhi-based firm is now planning to go deeper into the financial services market, focused mainly on merchants and small businesses. This will increase its competition with players such as  Razorpay, Capital Float, business-to-business e-commerce firm Udaan, and Flipkart co-founder Sachin Bansal’s Navi.
 
To begin with, BharatPe plans to expand offerings in the lending space, which, Sameer believes, is a $500-billion opportunity. The Sequoia-backed company, which is set to become the next unicorn, is planning to scale up its lending service for merchants and small businesses by providing loans worth Rs 7,000 crore by March next year.
 
“Many of these merchants and small businesses are new to credit, to whom banks and NBFCs (non-banking financial companies) don’t lend,” said Sameer in an interview.
 
“Till now, we were only working with retailers. Small and medium enterprises, distributors, traders, and wholesalers actually need credit even more. The vision is to become a bank for all SMEs.”
 
To address this gap, BharatPe is rolling out its lending product Distributor to Retailer (D2R) Finance. The product is designed to provide instant liquidity to distributors, wholesalers, traders and dealers across industry verticals. With this new lending product, the company will offer collateral-free loans of up to Rs 50 lakh, for a period of 7-30 days.
 
BharatPe said it was committed to building financial products that could address the credit gap faced by over 60 million SMEs and help them grow their businesses.
 
The product, which offers a credit line to distributors, is currently live in 10 cities. It has already attracted close to 2000 SME registrations in just one month of launch.
 
“We aim to provide this offering in all 100 cities where we are present by the end of FY22,” said Sameer. “In the last one year, we have emerged as one of the largest B2B fintech lenders in the country.”
 
The offering caters to businesses across industries, including FMCG (fast-moving consumer goods), pharma, electronics and telecom. Other industries include dairy, industrials, auto parts, stationery, fashion, as well as beauty and cosmetics.
 
The platform will help businesses keep track of their collections from retailers. The loan is available at a low interest rate, with zero processing fees and involves minimal paperwork.
 
The firm said D2R Finance is quick with loan disbursals, and takes one business day.
 
BharatPe has worked closely with millions of retailers over the last 2.5 years and empowered them with financial services products.
 
Recently, the firm said that it has surpassed its target of Rs 1,000 crore of loan disbursals in FY21 and hence, rehashed its target to Rs 1,250 crore.
 
The company has already given loans to close to 150,000 retailers and merchants.
 
BharatPe said its loan availing process saves multiple visits to the bank and eases the cumbersome documentation processes. This ensures minimal downtime for the merchant’s business.
 
The company leverages upon data analytics to enable a range of lending products that cater to the credit needs of those who are not served by traditional banks and other financial institutions.
 
It is increasing efforts to cater to under-penetrated regions and customer segments like small kirana stores and merchants. The firm said this could be made possible due to its superior underwriting methods and strong risk management measures.
 
BharatPe was co-founded by Ashneer Grover and Shashvat Nakrani in 2018, with the vision to make financial inclusion a reality for Indian merchants. It is now serving over 6 million merchants across 100 cities. Overall, it competes with Pine Labs, Paytm, Mswipe and Razorpay.
 
The firm said what differentiates it is that it is heavily focused on offline businesses. It has made huge inroads into the UPI (unified payments interface) offline transactions, processing over 80 million UPI transactions per month (annualised transaction processed value of over $7 billion).
 
Overall, BharatPe plans to offer all financial products revolved around a merchant, ranging from providing insurance, loans to debit and credit cards.  “India is still a heavily unorganised market and distributors have feet on the street,” said Sameer.
 
The firm has raised close to $270 million in equity and debt, from investors such as Coatue Management and Ribbit Capital.  It is gearing up to apply for a non-banking financial company (NBFC) licence.
 
The BharatPe and Centrum group combine is also in the race to acquire beleaguered PMC Bank. “We are having conversations with Reserve Bank of India (RBI),” said Sameer. “We will probably know the status in the coming months.”
 
Last September, BharatPe’s rival Razorpay started a new lending service for small businesses, seeking various ways for accessing easy and flexible credit and address the impact of the pandemic. 
 
The objective was to help them maintain constant cash flow and also repay the borrowed interest with flexible timelines.
 
The company had said that small businesses could borrow working capital with a credit limit of Rs 50,000 to Rs 10 lakh, within 10 seconds through the Razorpay dashboard, depending upon the credit history of the business.
 
Later, Razorpay also partnered with global payments technology company Visa to launch RazorpayX Corporate Cards. These bank-issued cards will help provide relief and stabilise the financial operations of severely impacted business owners of start-ups and small and medium enterprises, who are grappling with a chaotic economic environment.