Fintech digital lender Lendingkart has laid off 30% of its workforce, as business volumes of digital lending firms continue to be impacted, due to the covid-19 induced lockdown. This move is expected to impact more than 200 employees of Lendingkart, which has a total workforce of 675 staff members.
“The outbreak of covid-19 and the resultant slowdown has had a tremendous impact on the economy. This period has had a debilitating effect on the MSME sector where everything has come to a virtual standstill. NBFCs have been significantly impacted, with loan disbursements coming to a halt and moratorium impacting collections. We have been compelled to take some measures to rationalise our employee base across offices to ensure long term sustainable business,” said Lendingkart in email response to Mint’s queries.
While 15-20% of the staff is being let go due to an annual appraisal exercise, the decision to make additional layoffs was made keeping in mind the impact on the lending business in coming months, as digital lenders in the country struggle with liquidity and other challenges.
In addition to this, Lendingkart also said that the impacted employees will be on the company payrolls for the next 3-5 months, serving their notice, with insurance and medical insurance being provided to them for this period.
Earlier this week, Lendingkart announced that it has raised a total of ₹319.24 crore as a part of its Series D round, led by existing investors Fullerton Financial Holdings Pte Ltd., Bertelsmann India Investments, Sistema Asia Fund and IndiaQuotient.
“It is clear that digital lending businesses will continue to struggle, and will have to take such tough calls, with the RBI announcing the extension of the moratorium on term loans for another 3 months and considering the massive liquidity crunch which digital NBFCs are facing,” said a founder of a digital lending startup, which didn’t want to be named in the story.
On Friday, the Reserve Bank of India announced the extension on term loans for another 3 months till 31 August.
In March, the Digital Lenders Association of India (DLAI) which represents over 80 lending firms had reached out to the government and RBI, requesting that RBI’s moratorium, first announced in March, should also be extended to retail borrowers and digital lending platforms, by Banks and non-banking financial companies (NBFCs).
Further, digital lending marketplaces which work with several banks, NBFCs and digital lenders reported that approval rates of new loans were down by 75% during the lockdown.
Digital lenders have also been asking for full digitisation, and allowing eKYC and eSign mandates, from the regulator, for disbursing new loans, in a bid to curb the requirement of taking wet physical signatures from borrowers.
This article was first published on livemint.com.