Unconventionally traditional may seem like an oxymoron, but it fits Five Star Finance. There’s no better way to describe the Chennai-based non-banking financial company (NBFC). It has all the old-school trappings of a lender. From brick and mortar branches to 2,000 feet on the street that disburse Rs 3-4 lakh ($4,250 – $5,700) loans to small businesses. The unconventional part? Despite the relatively small loan sizes, Five Star still goes through the painstaking ordeal of taking property as collateral.
Five Star Finance shows unsecured lending is overrated
In the no-strings-attached small loans world, Five Star Finance has chosen the harder path of taking collateral. Despite this, it’s growing nearly as fast as fintechs
Five Star was a middling NBFC for the first 20 years of its life, and then supercharged itself to grow 20X in the past seven years
For growth like that, it took the hardest route there is—taking collateral for small-sized loans
In 2018, it became the first midsize NBFC to get an investment from PE giant TPG—Rs 425 crore
With growth rates comparable to fintechs, it is also outearning the likes of Capital Float and Lendingkart