With over two decades of experience as a technology consultant in cities like Chicago, San Francisco, Singapore and Sydney, she gained valuable insights into addressing this issue with the help of technology.
In 2011, she founded Kinara Capital that focuses on providing unsecured loans to micro, small and medium enterprises (MSMEs).
Setting up the business wasn’t easy, especially with Mumbai’s high rent costs, so she eventually chose Bengaluru. “Rents in Mumbai then were at least 48% higher than the other cities, so I evaluated Chennai, Bangalore and Hyderabad and chose this city because of its mix of microfinance, banking and technology talent,” Shah, who is the CEO of Kinara Capital, told ET in an interview.
Today, with a physical presence in more than 100 cities, Kinara is aiming to surpass the $100-million revenue benchmark this year.
Shah, who won the Woman Ahead category at The Economic Times Startup Awards 2024, is focusing on deepening its reach in existing markets and forming strategic partnerships to serve more MSMEs.
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Kinara operates in over 100 cities across Tamil Nadu, Karnataka, Andhra Pradesh, Telangana, Maharashtra, and Gujarat – states that account for around 70% of India’s manufacturing output. Shah plans to continue expanding in these areas by leveraging the firm’s branch-led model and strategic partnerships.Also Read | ET Startup Awards 2024: Lenskart gets 10/10, bags top honours
“We are strengthening our partnerships to provide tailored credit support through embedded financing,” she said.
Kinara has already surpassed Rs 100 crore in disbursements through collaborations across various industries.
India’s MSME sector has long faced a significant credit gap, estimated at $530 billion by an EY report.
Since its inception, Kinara has supported over 82,000 MSMEs across sectors such as manufacturing, construction, and building materials. The company has become a key player in this space, achieving its ninth consecutive profitable year in fiscal 2024 with a net profit of Rs 62 crore.
ETtech“Unsecured business lending has grown at 30%,” Shah said. “NBFCs are capturing a larger share by directly lending to underserved customers, thanks to our ability to navigate last-mile distribution and adopt alternative underwriting models compared to banks. Even private banks are benefiting from partnering with NBFCs through co-lending arrangements.”
Kinara offers collateral-free business loans ranging from Rs 5,000 to Rs 30 lakh. As of July 2024, the company’s loan book stood at Rs 3,172 crore, reflecting a 26% year-on-year growth. While no immovable collateral is required, Kinara hypothecates assets like stock and machinery, providing some security for its loans.
Looking ahead, Kinara expects to surpass $1 billion in cumulative disbursements. “We are focused on expanding collaborations and reaching a larger pool of underserved MSMEs,” Shah said. “We are also advocating for MSMEs to benefit from green financing and WaSH (water, sanitation and hygiene) financing, supporting sectors that offer products and services essential for climate change.”
Kinara also runs the HerVikas programme, which supports women-led MSMEs with tailored financing solutions. The initiative includes benefits such as upfront discounts, a two-month repayment holiday, and reduced processing fees. The programme has already disbursed over Rs 700 crore, with an additional allocation of Rs 500 crore, cumulative disbursement is slated to cross Rs 1,200 crore by the end of this fiscal year.
Shah underscored the importance of technology in Kinara’s operations. “Even 10-12 years ago, before Aadhaar, UPI, or India Stack, we believed that technology would be a key differentiator, helping us understand data better and improve underwriting over time,” she said.
The company currently operates 133 branches with over 1,600 field staff, providing doorstep services and omnichannel customer support in regional languages.
While Kinara remains committed to its branch-led model, customer behaviour is gradually shifting towards digital channels. Today, 10-15% of disbursements are sourced digitally, compared to none four years ago.
In the light of increased regulatory scrutiny in India’s digital lending sector, many fintech companies have had to adjust their business models or rethink partnerships.
Though these changes have increased operational costs for some, Shah believes the guidelines have provided much-needed clarity.
“Everyone now understands the boundaries (such as) what First Loss Default Guarantees (FLDG) we can or cannot offer,” she said. “Overall, the regulatory landscape is evolving to keep pace with innovation, ensuring consumer protection and financial ecosystem stability.”