Vivek Bansal and Sunil Daga to Launch MSME-Focused NBFC, Saarathi Finance
- ByStartupStory | September 10, 2024
Vivek Bansal, Group CFO at fintech unicorn InCred, and Sunil Daga, President at Kotak Mahindra Bank, are joining forces to launch a new MSME-focused NBFC (non-banking financial company) venture called Saarathi Finance, according to sources and an investor deck reviewed by Moneycontrol. Both executives, currently serving their notice periods, are actively engaging with investors to secure funding for the Mumbai-based startup.
Saarathi Finance, which was registered in August, has applied for an NBFC license from the Reserve Bank of India (RBI) and is reportedly in discussions with private equity investors to raise Rs 600 crore in equity, with an expected valuation of Rs 1,000 crore. The founders, Bansal and Daga, are also likely to contribute a portion of the capital themselves. “Discussions are ongoing,” sources mentioned.
The venture is launching at a time of increasing investor interest in fintech NBFCs, particularly those catering to the credit needs of under-served MSMEs (micro, small and medium enterprises). The credit gap in the MSME sector is estimated at Rs 92 trillion as of fiscal 2023, according to a Crisil report, with less than 10% of the 70 million MSMEs having access to formal credit.
Saarathi Finance’s Lending Focus
Saarathi Finance plans to focus on providing secured loans to MSMEs with ticket sizes ranging from Rs 5-20 lakhs, as well as unsecured personal loans for salaried individuals ranging between Rs 1-5 lakhs. The secured lending will be managed through Saarathi’s in-house NBFC, while personal loans will be delivered through partnerships with other financial institutions and fintech companies via a co-lending model.
According to the investor deck, Saarathi will target urban and semi-urban customers using a digital-first approach through a B2B2C super app. The company will compete with established players such as Aditya Birla Finance, Bajaj Finserv, and new-age firms like Indifi, UGro, Lendingkart, Flexiloan, and InCred.
In addition to fundraising, Saarathi is currently scouting for leadership talent and has begun talks with executives from leading banks and NBFCs.
The Founders’ Expertise
Vivek Bansal’s leadership experience spans over two decades, with previous roles at Fidelity Investments, Standard Chartered, and Yes Bank, where he served as Deputy CFO before joining InCred. His work at InCred included overseeing financial management, capital raising, and investor relations. Bansal’s departure from InCred was confirmed by Bhupinder Singh, Founder & Group CEO of InCred.
“I am deeply thankful to Vivek for his invaluable support in expanding and diversifying our liabilities base, leading the charge in securing our rating upgrade and establishing a robust governance and regulatory framework. I wish him all the best in his future endeavours and thank him for his unwavering commitment to InCred,” Singh said.
Meanwhile, Sunil Daga has been with Kotak Mahindra Bank for over 20 years, playing a critical role in building the bank’s MSME-focused working capital division. Daga has overseen key product categories like business loans, small-ticket secured loans, supply chain financing, and working capital solutions. He is also associated with trade forums such as the CII MSME National Chapter and the MP Udyog Chamber of Commerce.
According to the pitch deck, Daga is likely to join Saarathi Finance as an executive director.
A Growing Market for MSME Lending
As per a Crisil report, small business loans are expected to grow at a 15% compound annual growth rate (CAGR) between fiscal 2023 and 2026. Increasing credit penetration, enhanced use of technology, and the entry of new players are contributing to the sector’s expansion. Less than 10% of MSMEs currently have access to formal credit, creating a large untapped market for financial institutions.
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