NBFCs Queue Up to Fund Sellers on e-Marketplaces

ONLINE PUSH NBFCs use co’s database to arrive at pricing & quantum of loans for each seller With traditional biz facing a slowdown, nimble fin firms tie up with ecomm players
Non-banking finance companies are increasingly lending to sellers on major ecommerce marketplaces even as some of their traditional businesses such as equipment financing and truck funding face a slowdown.Ecommerce companies such as Snapdeal and Flipkart are tying up with these nimble financial institutions to provide funding -mainly working capital -to sellers on their platforms.

Bajaj Finance, for example, has rolled out a scheme to provide loans of up to `. 2 crore for sellers of Flipkart and has processed 100 applications in just over a month.

Similarly , Tata Capital has entered into a tie-up with Snapdeal for financing its sellers and online merchants through unsecured loans in the range of ` . 5 lakh to `. 2 crore at competitive rates and with flexible tenures. Snapdeal has arranged finance for around 300 sellers on its platform.

Online marketplaces have huge databases that finance companies use to arrive at the pricing and the quantum of loans for each seller, based on factors such as for how long they have been on the marketplace, size of business they do on the site, return percentage and customer review. Rate of interest offered ranges from 11-15% depending on the sellers’ track record and loans are offered in two-three working days.

“A good-to-excellent review by customers can lower interest rate by 50 basis points,“ said Devang Modi, president, consumer finance, at Bajaj Finance.

“The amount of loan is determined by consistent business done in the last six months and average standard deviation in business.“

Pradeep Bandivadekar, COO for corporate finance division at Tata Capital, said its partnership with Snapdeal reflects its recognition “that ecommerce has tremendous potential“.Snapdeal has over 150,000 sellers from 5,000 locations.

The ecommerce sector in India has grown an average 34% a year since 2009 to touch $16.4 billion in 2014. The sector is expected to be in the range of $22 billion in 2015, a PwC report said.

Source: The Economic Times

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Author:

Neeraj; an entrepreneur & a visionary in the field of Railway, Defense & Automobiles, is a graduate in commerce and a Harvard Business School Alumni. He’s an expert in govt. liasoning & contracting and has an exceptional network & connections at both local as well as global level. He’s an expert in Market Strategy & Planning and has served number of overseas companies as an advisor/consultant. He takes a profound interest in upcoming startups & is very receptive towards ground-breaking ideas & innovations. He likes to brainstorm those ideas and if the values & philosophies matches; he is even ready to invest his resources, serve as a mentor or act as an incubator to futuristic businesses.

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