Digital lending startups, which were trying to create a new order in the credit business, have taken some of the hardest knocks in the current macroeconomic conditions. The ones with exposure to small and medium enterprises are particularly beaten down by the challenges, mainly a bad debt pile-up.

A prime example is Ahmedabad-based Lendingkart. Founded by Harshvardhan Lunia and Mukul Sachan in 2014, it rode the early fintech wave to become one of the largest online players in the country. In seven years, it has disbursed loans of more than Rs 10,000 crore. 

Lendingkart used tech to underwrite small or midsized businesses, a base banks and traditional NBFCs overlook, and extend term loans. The approach appeared solid until it wasn’t: in the last financial year, the startup suffered huge losses of Rs 177 crore and restructured almost 17% of its loan portfolio because of Covid-19’s impact.

Lunia is now rethinking its business strategies, though he remains optimistic about a new age of finance. “Through 2010-20, NBFCs changed the way consumers borrowed. In the next 10 years, fintechs will drive disruptions; concepts like embedded finance and on-the-go credit will dictate this decade,” he told The CapTable.