Mumbai-based fintech lender Kinara Capital—known for providing micro- and small-business loans across India—has announced plans to raise equity capital to stabilize its balance sheet following losses from unsecured loan defaults totaling ₹350 crore (approx. $42 million) in fiscal year 2025. The company has reportedly informed its lenders it may need covenant waivers amid a tightening credit environment (economictimes.com).
Founded in 2010 with a mission to serve underserved entrepreneurs, Kinara has grown to become a leading SMB fintech lender in semi-urban India. However, the past year saw a rise in missed or delayed repayments as economic pressures hit small firms—prompting careful scrutiny from regulators and risk-focused investors. The company now seeks to shore up its capital buffer to support ongoing lending operations and ensure sustainable growth.
Industry insiders suggest that the funding will come from existing venture or private equity backers, potentially including a local financial institution, though no names have been confirmed. Kinara aims to raise the capital in mid-2025 to reinforce liquidity, meet regulator set capital adequacy ratios, and resume relaxed lending terms that helped scale its model—but were challenged in stressed conditions.
Why It Matters:
- Highlights credit risk inherent in unsecured lending within fintech portfolios
- Demonstrates proactive balance sheet management amid repayment volatility
- May trigger a credit recalibration across India’s early-stage fintech lenders
