India-based Jai Kisan, a Fintech startup that is focused on bringing modern financial services to the country’s rural areas, where commercial banking institutions have very low penetration rates, revealed on Monday (May 31, 2021) that it had acquired $30 million in capital through a new funding round.
Hundreds of millions of consumers in India reside in rural areas and most of them don’t have a standard credit score. The jobs these people do mainly involves farming, which is not considered a formal business by the nation’s lenders. These farmers and people working in similar jobs don’t have an established or documented credit history, which means banks are not willing to take risks by offering them credit.
Most of the credit these people do manage to obtain gets mismanaged, resulting in higher interest rates and also very high default rates.
Mumbai-based Jai Kisan aims to address these issues by treating farmers and other similar professionals as legitimate businesses instead of consumers.
The Fintech firm has created its own system, called Bharat Khata, which is helping individual consumers and businesses get access to affordable financing while making sure that the funds they secure are being used for agri-inputs and equipment and other income-generating purposes.
Arjun Ahluwalia, Co-founder and CEO at Jai Kisan, stated that financial services are vital for these people as their livelihood depends on them.
“The ability to buy now and pay later is how most people shop for things in India. Credit is an expectation by the Indian customer — it’s not a value added service.”
Arjun also noted that if there’s availability of formal financing to clients, then it is not just the customer who will benefit from additional resources. He explained that the entire ecosystem that “revolves around that customer benefits.”
Arjun pointed to the rise of Bajaj Finance, which has helped Indian businesses with achieving their targets by offering credit at the time of purchase, and Xiaomi, the nation’s largest smartphone vendor, which sells a large number of its devices to people on monthly instalment plans.
Bharat Khata service, which was introduced in April 2020, managed to capture over $380 million of annualized GTV run-rate across more than 25,000 storefronts by the financial year ending March 31, 2021, the company noted.
The company’s management also mentioned:
“Jai Kisan has financed over 15% of the transactions which portrays the monetizability and quality of commerce being captured. The ability to have visibility and virality of high-quality transactions has enabled Jai Kisan to scale business by over 50% in 3 months. The unprecedented growth trajectory stands testament to Jai Kisan’s capabilities to deploy capital efficiently by focusing on core customer credit needs.”
The Fintech company, which currently offers services in eight states in South India, is planning to further expand its operations and will also be hiring more staff members.
On Monday, the company confirmed that it had secured $30 million via a Series A round that was led by Mirae Asset, Syngenta Ventures, and supported by existing investors Blume, Arkam Ventures, NABVENTURES, Prophetic Ventures and Better Capital. A certain amount of the funding was acquired as debt from Blacksoil, Stride Ventures, and Trifecta Capital.
Ashish Dave, CEO of the India Venture Investments for the South Korean company Mirae Asset, remarked:
“Jai Kisan is at the cusp of disrupting the rural financing industry and we’re glad to be a part of their growth story. Jai Kisan’s stellar growth, excellent asset quality and expanding footprint make them a highly differentiated player in the segment. Mirae Asset has always believed in backing companies which aim to become category leaders which is evident from our other investments and we believe Jai Kisan is on the journey of doing so for rural finance.”