CredAvenue’s bid to reinvigorate India’s slowing enterprise credit faucet

Over the last year, enterprise lending marketplace CredAvenue has facilitated Rs 65,000 crore in disbursals. By March 2022, it expects to hit the Rs 1,00,000 crore mark. All this while India's credit growth has slowed to a six-decade low

CredAvenue connects corporate borrowers with lenders. It doubled the amount of debt placed on its platform

Most small borrowers only borrow using loans. And they miss out on a whole array of debt products that only top tier company's avail, something CredAvenue aims to fix

However, the biggest constraint for CredAvenue is the extent to which lenders will open up their purse strings

It may not have access to a large pool of lenders like mutual fund houses. So in addition to being a platform, it is also a player, as it lends on the platform through its asset management and NBFC arms

In the year ended March 2021, credit growth slowed slowed The Hindu Credit growth slowed to 59-year low of 5.56% Read more to a 59-year low of 5.56%. For Indian companies, whose fortunes are often closely tied to their ability to access debt, these were desperate desperate The Ken Death by downgrade: India’s MSMEs risk going from moratorium to crematorium Read more times.

Even as the flow of credit seemed to be slowing, three-year-old Vivriti Capital emerged as an oasis for India’s credit-thirsty businesses. Till now, it has facilitated Rs 65,000 crore ($8.8 billion) in debt through its online enterprise debt marketplace, CredAvenue. The platform, which connects corporate borrowers and lenders, intends to enable the disbursal of Rs 1,00,000 crore ($13.6 billion) of credit by the end of March 2022.

CredAvenue walks the space dominated by “arrangers”, who range from small-time chartered accountants to large, dedicated desks at big banks. It is also one of the few full-fledged online intermediaries that facilitates debt through multiple products. Most other online platforms stick to a single type of debt product.

For instance, debt products such as commercial papers allow a company to raise funds for very short tenures and without collateral. Corporate bonds, on the other hand, are often collateral-backed. The difference between debt products can also be in the type of collateral. For example, asset-backed securities ( ABS ABS asset-backed security An ABS is a type of investment that is collateralized by an underlying pool of assets—usually ones that generate a cash flow from debt, such as loans, leases, credit card balances ) help firms raise money by offering a pool of their own loans as collateral.

Despite the shortage of platforms like it, CredAvenue’s utility within the Indian business ecosystem cannot be overstated.

Globally, companies raise money through the capital markets, where buyers and sellers trade in equities or debt. In India, the equity capital market equity capital market equity capital market Equity capital is raised by issuing shares in a company, either publicly or privately is about 2X the size of the debt capital market, which is $1 trillion in size size World Debt Clocks National debt of India Read more .

Even within India’s admittedly limited debt capital markets, most debt is taken in the form of loans.

AUTHOR

Arundhati Ramanathan

Arundhati is Bengaluru-based. She is interested in how people use money in the digital age and how new economies will take shape based on that interaction. She has spent over 12 years reporting and writing on various subjects. Previous stints were at Mint, Outlook Business and Reuters.

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