RFL aims to solve various financing needs of SMEs: Kavi Arora

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Vaneeta Punchvedi | 16 Jun, 2014
Religare Finvest Limited (RFL), a subsidiary of Religare Enterprises Limited (REL), has developed a unique mix of products that aim to solve various financing needs of every entity in the Small and Medium Enterprise (SME) genre, both for long and short term requirements. RFL focuses on the self-employed, who are in business for more than three four years with a proven business model and financial track record and who aspire to raise capital for expansion, Managing Director & CEO at Religare Finvest Limited, Kavi Arora said in an exclusive interview to SME Times.

He said, at Religare Finvest Limited Loans are granted post an in-depth and detailed financial analysis and credit underwriting of the clients. "We offer both 'Secured' (first charge on plant and machinery) and 'unsecured' loans," he added.

Excerpts of the interview...

Please tell us something about your organization?
Kavi Arora: Religare Finvest Limited (RFL), a subsidiary of Religare Enterprises Limited (REL), is a Small and Medium Enterprise (SME) financing focused Non-Banking Finance Company (NBFC). With a wide network of branches and ISO certification 9001:2008, RFL is committed to providing debt capital to power the growth of the SME's which constitute the backbone of Indiaâs economy. Its lending solutions include:

SME Mortgage Loans
SME Working Capital Loans
The Company also runs a retail capital markets financing business which includes Loan against Marketable Securities.

RFL understands that each financial need is unique and offers customized solutions to empower the customer to prosper. It has presence across all major cities and plays a vital role in nurturing the customersâ business while growing to a book size of over INR 11484.72 crores. (As of March 31st 2014)

How Religare Finvest supports the small and medium enterprises?
Kavi Arora: SME are the engine of India's economy. They are a central part of the economic fabric in a developing country like India, and they play a significant part in nurturing growth, innovation and prosperity.

Religare Finvest Limited (RFL) is widely acknowledged as a dedicated SME focused debt capital provider and has built a high quality SME focused NBFC platform. We have built a strong and robust model that is dedicated to the growth of SMEs in India.

RFL being a SME focused lending organization has its vision set to be a trusted partner for the customers. Not only by providing timely credit to SMEs, RFL has also started working towards initiatives to provide holistic growth to SMEs.

Connect Programs: RFL built various online and offline platforms to connect with business owners. As a part of our cluster approach to reach out to SMEs to support them, we regularly partner with key industry associations. Our leadership team is actively contributing online on various relevant issues pertaining to the business needs of SMEs in India.
Guidebook on Family managed Business (FMBs): The Company curated a guidebook on family managed businesses (FMBs) to support SMEs on a subject that is of prime importance in a culturally vivid country. The book was first launched with EDI, Ahmedabad which is a premier institution that imparts courses on entrepreneurship. The book has also been presented to various industry associations.

Religare SME Loans, basis its vision to support the entrepreneurs has built the organization in a manner that most experienced and senior resources of the organization are placed in the clusters. These banking professionals are being specially trained from time to time to service the needs of the clusters. Such unique people structure along with the understanding helps reduce the delivery time to disburse credit to entrepreneurs.

We have always seen that the major problem with SMEs is lack of credit and funding; banks are not so good in providing loans to SMEs. Do you think that this is main bottleneck for the SME sector?
Kavi Arora: The SME sector plays a significant role in the Indian economy. A catalyst for socioeconomic transformation of the country, the sector is critical in meeting the national objectives of generating employment, reducing poverty, and discouraging rural-urban migration.

These enterprises help to build a thriving entrepreneurial Eco-system, in addition to promoting the use of indigenous technologies. The sector has exhibited consistent growth over the last few years, but it has done so in a constrained environment often resulting in inefficient resource utilization.

Of the many challenges impeding the growth and development of SMEs, inadequate access to financial resources is one of the key bottlenecks that make these enterprises vulnerable, particularly in periods of economic downturn.

Please tell our readers what is the process of taking loan from Religare Finvest?
Kavi Arora: Religare Finvest Limited is a dedicated SME-focused debt capital provider and our bouquet of offerings consists of working capital, loans against property, loans against marketable securities, and employee stock option financing.

RFL came into existence with the intent of driving a paradigm shift in how people running or small and medium enterprises secured funds from lenders for their expansion. Anyone managing a small business would know how tough it is to get credit from a typical risk-averse lender who is generally more interested in backing already well-established enterprises and the idea of putting his bets on a fledgling entity is not very appealing.

Realizing the untapped market opportunity, RFL adopted a contrarian approach and targeted building a lending business around the under-served MSME segment.

RFL, meanwhile, has developed a unique mix of products that aim to solve various financing needs of every entity in the SME genre, both for long and short term requirements. RFL focuses on the self-employed, who are in business for more than three four years with a proven business model and financial track record and who aspire to raise capital for expansion.

At Religare Finvest Limited Loans are granted post an in-depth and detailed financial analysis and credit underwriting of the clients. We offer both 'Secured' (first charge on plant and machinery) and 'unsecured' loans.

You are operating a whole organization which is working for SMEs and with SMEs for almost a decade. This means you are an expert in SME sector. Will you please share some major problems of this sector.
Kavi Arora: Although the MSME sector has been growing at a faster rate than the overall industrial sector, MSMEs experience multiple constraints that threaten to derail the sector's growth trajectory.

Some of key hindrances that MSMEs face are:

1. Poor Market Access.
2. Limited Access to Infrastructure
3. Inadequate Finance
4. Lack of Managerial Competence
5. Outdated Technology

Do you have solutions for these problems?
Kavi Arora: Availability of funds, technological upgrade for plant, machinery and skills improvement and on time payment of dues to the small and medium enterprise (SME) continue to be the biggest challenges faced by the SME sector in the country. Across all regions of the country availability of funds for the SME sector continues to the top challenge.

To make the sector internationally competitive we will need to make funds, technology available. Also policies carved out by the government for the sector need to be implemented, both industry bodies and the government need to work together to make the SME sector competitive.

Our experience in the financial services sector allows us to understand market trends and mechanics and help us to design products that suit the requirements of our target customers as well as address opportunities that arise out of changes in market trends.

What do expect from the new government for the growth and development of the SMEs?
Kavi Arora: There is no doubt that with MSME sector being the biggest employer, the new government will have to bring in special packages to support production and also build markets for the produce and thus support employ-ability. The government should focus on inclusive growth. A priority sector status to MSME ecosystem can help in faster payments to them, banking channels and skill development. Though this is being said time and again that infrastructure would be the backbone of growth to come close to the levels of China's of the world, this is possible with upright allocation to the allied MSMEs.

In our interaction with various SMEs across various clusters, previous promises of SEZ subsidies have been a bone of contention and thus government should think of putting some exchequer towards the revival of faith which in turn will lead to inclusive production and proper earnings through distribution in domestic as well as international markets.

What do you suggest to SMEs for their self-development?
Kavi Arora: Read, attend seminars and workshops, meet people and spend quality time knowing more and improving yourself.

Schooling your executives
Developing reading as a habit
Networking
Socializing

Crucial traits for business-building success:

Enjoy what you do:
Revenue and growth apart, personal satisfaction is very important in tending your business, as much as, or more important than your technical skills!

Take your job seriously
Believe in your business and the services you offer, take it seriously and always stay motivated! Any misgivings and negativity would affect the business more than you
would expect.

Plan, plan, plan!
Planning every aspect of your business is crucial â Analyze, discuss and frame out a sound, fail-proof plan that will help you achieve your business goals.

Manage money wisely
Cash flow is the life blood of your business â protect and manage it well! Invest only when you are sure that your business will be able to survive even in the worst-case scenario. Keep track of all your expenditure and revenue â at any given time, you should be aware of the present financial status of your company.