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Finance Bill 2019 amends to give more powers to RBI to regulate NBFCs
Publication- Business Standard
Edition- Online
Date- 25 July, 2019
Amendments to give more powers to RBI to regulate NBFCs form part of Finance Bill, 2019, which has been introduced in the ongoing Budget Session 2019 of Parliament. The proposed amendments would empower RBI to supersede the Board of an NBFC or remove its director(s), amalgamate or reconstruct or split an NBFC in public interest or for financial stability, remove and debar auditors, direct the inspection and audit of any group company of an NBFC, raise the Net Owned Fund requirement for NBFCs, and impose higher penalties in case of legal contraventions. With regard to taking of necessary regulatory and supervisory steps to strengthen NBFCs and maintain stability of the financial system, RBI has stated that it has taken a number of measures to strengthen NBFCs and maintain stability of the financial system.
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RBI reins in NBFC sector post Budget 2019, gets powers over boards
Publication- Business Today
Edition- Online
Date- 25 July, 2019
With the non-banking financial company (NBFC) sector having come under serious financial pressure over the past few quarters, the government has come up with a proposal for laws and regulations that give the regulator more control. Consequently, the Finance Bill, 2019 (Finance Bill) proposes to amend the Reserve Bank of India Act, 1934 (RBI Act), to give the RBI a bigger role in the management of NBFCs in adverse situations.
Control over Management: The RBI has been given two ways, under newly inserted sections 45-ID and 45-IE, to control the management of an NBFC. It can either replace directors of a non-government NBFC or supersede the board of the NBFC. In case of the removal of director, the RBI can go on to appoint a person as a director in place of the removed director who shall hold office for as long as the RBI requires, subject to 3 years at a time, which may be renewed. Such director shall also be saved from being held liable for anything done as a director in good faith in the execution of his/her duties.
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Mumbai-based Kissht raises ₹50 cr from Sachin Bansal’s BAC Acquisition
Publication- The Indian Wire
Edition- Online
Date- 25 July, 2019
In yet another development, Sachin Bansal, co-founder of Flipkart, has, reportedly, invested ₹50 crore in Kissht, a Mumbai-based consumer lending startup. Bansal’s and Ankit Agarwal‘s investment firm BAC Acquisition is said to have invested this capital in the form of debt funding. Earlier, Kissht had secured $30 million in a series C financing round led by Vertex Ventures Southeast Asia and many others.
Kissht was founded by Krishnan Vishwanathan and Ranvir Singh in 2015. The company provides purchase financing and personal loans to its customers through a financial technology platform which is integrated with online and offline merchants. The startup claims to be present in more than 50 online and over 3,500 offline points of sale across categories, including consumer durables, electronics, health, alternative energy and education, and enables customers to easily access credit for their purchases.
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Delhi-based Cash Suvidha bags $2.3 million in debt funding to expand loan book
Publication- The Indian Wire
Edition- Online
Date- 25 July, 2019
Cash Suvidha, a Delhi-based online lending platform has secured $2.3 million (approx ₹15 crore) in debt funding through private placement on non-convertible debentures and from various financial institutions. The fintech platform will utilize the infuse capital to increase the loan books of the company. While, till date, it has raised $10.25 million funding.
Geeta Goswami, cofounder, Cash Suvidha, said, “Cash Suvidha’s financial performance has been strong since inception and we are glad to have significantly captured the market in just 3 years. This capital infusion will allow us to further accelerate our fast-growing lending platform and enhance our ability to provide the best terms to borrowers that do not have an established credit history.”
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Sachin Bansal stretches his fintech portfolio with investment in Kissht
Publication- Entrackr
Edition- Online
Date- 25 July, 2019
Sachin Bansal’s fintech play is ramping up at a pace where everyday springs up a new headline mentioning his investment in a new fintech startup. Yesterday, it was Chaitanya India, a couple of days before that it was Essel Group’s mutual fund business and then there was the investment in Piramal Group’s fintech arm. Today, media reports mention Sachin Bansal investing Rs 50 crore in consumer lending startup Kissht. As usual, this investment has also been made via the debt route from Bansal’s new business entity BAC Acquisitions (BACQ), where the details of the transaction are uncertain yet.
This development counts the fact that being a purchase financing startup Kissht derives a major part of their business from Sachin Bansal’s last entrepreneurial gig – Flipkart. So far, the company has raised $42 million in risk capital, $2 million Series B round in June 2017, $10 million extended Series B round in November 2017, and $30 million Series C round in September last year. The major investors in the firm are Fosun RZ Capital, Vertex Ventures, Sistema Asia Fund, Ventureast, and Endiya Partners.
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How India’s NBFC Startups Are Using Deeptech To Change The SME Lending Game
Publication- Inc 42
Edition- Online
Date- 25 July, 2019
The NBFC business model has been considered broken by many experts since the beginning. NBFCs rely on short-term funds which are lent out for longer terms to small and medium enterprises (SMEs) which brings in risk of asset-liability mismatch. This is said to be one of the major reasons behind the recent challenges in the state of NBFC liquidity after the IL&FS default crisis in October 2018. As their operations are catered towards unorganised and under-served segments, the risk of NPAs is also said to be much higher for NBFCs than banks and MFIs.
Another startup NeoGrowth has a system in place where 85% of the loans are daily repayment products and 45% of loans have repayments from exclusive terminals which mitigates risk of default. “This model ensures a high collection efficiency of over 98%,” claimed Piyush Khaitan, Founder and managing director, NeoGrowth.
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Chennai-based Five Star Business Finance gets $50 million in funding round led by TPG Capital
Publication- The Indian Wire
Edition- Online
Date- 25 July, 2019
Five Star Business Finance Limited, a Chennai-based non-banking financing company has bagged $50 million (approx ₹345 crore) in a funding round led by TPG Capital. After this round, the company’s valuation reaches $950 million. “Five Star’s approach is laser focussed on providing small business loans to underserved customers. Our strong management team has driven rapid growth after building a robust foundation.
With an acute focus on profitability and asset quality, we’ve created a scalable business model recognised by all of our investors and debt partners. Our vision is to double our AUM this year with continued asset quality to build towards IPO scale and look forward to continued support from our partners,” Lakshmipathy, Chairman and Managing Director, Five Star, said. Besides, Five Star, there are several other non-banking finance firms which includes InCred Finance, Capital Float, Bank Bazaar, NeoGrowth, and many more.
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