The partnership is expected to bring more businesses into the organised finance structure as it will address the needs for borrowers with limited or no documentation and no access to organised bank credit.
The partnership with Capital Float, which is IDFC’s first in the digital lending space, will give them access to Capital Float’s network of borrowers – thereby expanding its customer base and diversity in its portfolio of small ticket loans. In return, Capital Float can leverage IDFC Bank’s product innovation and extreme customisation of banking products including the bank’s strong balance sheet. Additionally, IDFC Bank being would be able to deliver a seamless digital experience to its customers through fully integrated, technology-intensive processes.
Despite the exponential growth of small and micro enterprises, there has been severe restrictions to formal crediting systems, which in turn makes these businesses turn to unorganised financing channels. Up to 70% is supposedly unaddressed by the banking system, however, with the growing digital penetration many are turning to digital means of lending.
Speaking on the partnership, Dr. Rajiv Lall, MD & CEO, IDFC Bank, said, “Radical partnering with fintech companies will enable us to serve small businesses digitally, while rapidly building the Bank’s customer base. The deep integration of our technology offering with that of Capital Float’s, will help us deliver a seamless digital experience to small merchants and entrepreneurs – from credit assessment and speedy processing of loan requests to making available to them, a range of evolved banking solutions. It will also give us access to the top 50 cities, and segments that hitherto did not have access to formal credit.”
Further, Sashank Rishyasringa, Co-Founder, Capital Float, added, “This alliance paves the way for fintech companies and banks to not just coexist, but actively collaborate to deliver a differentiated value proposition. Both entities have unique capabilities and have come together to create a potent relationship from a financing perspective. We’ve witnessed the success of similar partnerships in the West, such as the collaborations between JP Morgan-OnDeck and RBS-Funding Circle.”