Lendingkart CTO: how technology is redefining financial risk management post COVID-19

Manish Bhatia, President of Technology, Analytics and Capabilities at Lendingkart, shares how technology helps the company in managing financial risk while catering to credit-deprived MSMEs.

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The Micro, Small and Medium Enterprises (MSME) sector in India was on a streak – with close to 6 crore 34 lakh enterprises raking in over 28 percent of the nation’s GDP, the sector was one of the strongest drivers for economic growth and employment in the country. That was until COVID-19 put the brakes on the dream run.

Following the outbreak, it was reported that 60 percent of MSMEs claimed recovery funding owing to restricted working capital and lack of manpower, according to a survey conducted by the Reserve Bank of India (RBI). Furthermore, RBI identified MSMEs among the five most adversely affected sectors.

The availability of unsecured capital loans has always been a tricky business. On one hand, it is one of the key drivers to economic growth, but on the other, it severely impacts Non-Banking Financial Companies (NBFCs) on account of bad debts.

Unlike most banks and NBFCs, Lendingkart’s business model takes a different approach to assessing risk. The company does not assess credit-worthiness based solely on an applicant’s credit history and financial records but instead relies more on machine learning models that analyse data from numerous data sources comprising as many as 10,000 distinct variables.

CIO India spoke with Manish Bhatia, President of Technology, Analytics and Capabilities at Lendingkart, to get a read on how the company plays the balancing act by helping MSMEs with capital loans, at the same time, keeping bad debts to a minimum. Here are edited excerpts of the conversation.

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