KapitalTech: Simplified Lending

Shaily Maheshwari, Co-founder
Competitive environment is a growth catalyser for businesses, large, medium or small. Unfortunately, small businesses in India have been flourishing in a disorganized market for a while now, capitalizing on trends and changing consumer preferences. The lack of timely funds, particularly in the form of short- term business finance, have been giving such businesses a hard time existing. However, the tables have turned now. Headquartered in Mumbai, KapitalTech is a FinTech startup which offers collateral-free short-term loans with customized loan repayments to its MSME customers. The company’s driving force is its innovative and highly passionate team that plays around off-the- edge technologies with deep human insight into lending. This fintech startup has set its goal at delivering instant hassle-free credit to a wider spectrum of MSME businesses including millions of unorganized and unreached enterprises with limited credit history or high leverage on paper.

On 2015, Shaily and Vivek set foot on a journey to change the norms how risks are analyzed and loans are disbursed. Objective was to reach out to those segments of loan requests, where risks went through only one layer of filter and then the requests rejected. The two Co-founders kicked off the venture with a very limited capital in a very constrained manner. In 2016, Fortune backed KapitalTech’s leadership team and business plan by providing long term growth capital. Fortune is one of the listed financial conglomerates backed by Sudhir Valia of Sun Pharma. Fortune Financial Services (India) Limited is involved in Retail Lending, Housing Finance, Equities and Derivatives trading, Equity Research, Commodities Trading, Portfolio Management Services, Distribution of Mutual Funds, IPO & Insurance products and Investment Banking services.

Inception of this startup was a single city, single product approach to business. This date, looks towards 90 cities where KapitalTech is operating. Moreover, the company is on full throttle to establish in 200 locations by June 2018. Presently, KapitalTech’s portfolio includes 4 products in India. The Fintech startup is well capitalised to aim at a disbursal of 2500 Crores worth of loans in the next 12 months. A record of its own kind; KapitalTech is the first Indian Fintech company which received a debt from a public sector bank. The achievement is critical in this domain of business.

Dexterity in Data Handling
KapitalTech’s striking new AI engine called, Dexter, is a statistical modelling-based proprietary analytics engine that primarily serves to enable the KapitalTech team of decision makers to visualize beyond the perceived risk of traditional credit frameworks. The model first functioned as a simple rule- based decision support system using just 50 data points. As the engine collected deep credit insights that the KapitalTech’s on-ground team built over time, Dexter rapidly transformed into a highly robust engine to underwrite Indian businesses and an extremely flexible engine for customer risk and reliability score computation. At this moment, Dexter has evolved to take into account over 2,500 data points simultaneously to deliver almost real-time appraisal of potential borrowers. Leveraging simple, yet profound analytics techniques viz. pattern matching, dimensionality reduction, probabilistic record linkage, etc., Dexter couples a wide range of data sets from multiple sources to reduce them into comprehensibly fewer number of metavariables.

Metavariables are processed through KapitalTech’s proprietary binary modelling and credit analytics algorithms to generate optimized prediction for automated decision making. Dexter's capability to judge accurately the ability and willingness of borrowers to repay minimizes the perceived risk, while extending the credit spectrum.

Dexter has multiple sub modules in it. Shaily explains that the team not only uses Dexter for underwriting risks, but it also does a lot of Fraud detection, pattern recognition in terms of delinquency. The intense amount of technology put into it improves productivity and efficiency of the people. The company uses tech in order to improve the productivity of the people and hence the profitability of the organization.

Deep Risk Analysis to Reach the Unreached
The engine collects data and in considerable situations, it categorizes the case as potential delinquent case and appropriate measures are
taken before hand. Machine learning has enabled the organization to identify patterns. In terms of predictive analysis or precautionary measures to avoid delinquent cases KapitalTech watches over two types of cases; bouncing pattern type of case being one. The second type of case involves the ones that depend on industry trends like demonetization. Dexter keeps evaluating such trends there by doing proper trend analysis.

As the engine collected deep credit insights that the KapitalTech’s on-ground team built over time, Dexter rapidly transformed into a highly robust engine to underwrite Indian businesses

“We are able to give loans to people, whom the traditional guys are not able to. We have segment wise underwriting capabilities. We have developed various templates which help us to identify that a particular case has high unaccounted income; hence the underwriting norms are different. DSCR, Debt-Equity, balance multipliers, all these ratios differ”, explains Shaily. While in the industry, all these ratios remain very stagnant across customers, a bar/ restaurant in Bangalore may behave differently in terms of their account management than how a bar/ restaurant in Surat may. Therefore, KapitalTech has collected datasets and having coded all such parameters in their algorithms, has proceeded to provide customized loans to sectors where traditional banks couldn’t.

Vivek Raghavan, Co-founder

In an instance, Shaily elaborates that an individual’s credit due amount of 500 or 1000 is unpaid since 2008 and it's compounding. However, this person is paying off his/her personal loan on time. The credit bureau does not take that into account for a CIBIL score. KapitalTech on the contrary considers more than just the CIBIL score for risk assessments, in order to provide loans. The startup has its own algorithm called Gatekeeper to keep a check and approve cases. “We only take the base data and put in our logic for an understanding of risk. It filters all the unwanted cases before even it reaches Dexter”, adds Shaily.

KapitalTech loans are tailor-made to each customer segment and are aligned to the underlying cash flows of these businesses. In the course of their operations, the Fintech startup has seen beyond the 'perceived risk’tag that traditional financing channels have assigned the deserving businesses, through their highly researched and unique proprietary underwriting methodology. KapitalTech is goal driven to deliver financing to customers with a mixture of exceptional underwriting frameworks, lightning fast speeds, hassle free documentation and customer-centric processes that set benchmarks in applaudable lending process.

Customized offerings for customers:
KapitalTech has the following two main product categories. Each of these categories will be a growth engine. The company will continue to add more products and product variants to serve wider customer bases.

Unsecured Business Loans
• Quick business loans of INR 2 Lac to INR 1.5 Crore
• Minimum Documentation
• Tenure of 3 months to 24 months
• Flexible Repayment Options
• For Working Capital or For Investment

Loans Against Property
• Loan Sanction within 7 days
• Higher amounts compared to traditional lenders
• Flexible Repayment Options
• Minimum Documentation