MicroVest has announced an investment in Kinara Capital, a Non-Bank Financial Company (NBFC) that specializes in providing loans to small businesses across India. With a significant proportion of Kinara’s clients being first-time users of formal financial services, the $8 million investment will help Kinara reach a greater number of underserved MSMEs and bridge the financing gap in the sector.
Approximately 86% of the MSMEs in India lack access to credit, translating into a financing gap of approximately $530 billion in the MSME sector (Avendus Capital, 2023). This credit gap can often be attributed to complexities associated with assessing informal MSMEs, which has deterred traditional Banks and NBFCs who face difficulties assessing credit risk in the absence of credit history and collateral.
Kinara’s flagship product—an unsecured, working capital loan—provides critical financing to underserved MSMEs with a disbursement time of just two days, enabling businesses to seize market opportunities. The majority of Kinara’s borrowers are underserved small-time manufacturing and trading SMEs that lack fixed assets and have capital needs for unsecured loans, which is larger than average loan sizes offered by traditional microfinance institutions.
Kinara was founded in 2011 by Hardika Shah and currently operates a network of 120 branches across South and Western India. The company received Smart Campaign and Gold Certification by SPTF+ Cerise, and an A- assessment from MicroFinanza Rating (MFR) for social performance management and client protection systems.
This is MicroVest’s second investment in the company.
