Lendingkart Finance posts Rs 288 crore loss in FY25

Lendingkart Finance, the non-banking finance arm of Temasek-backed Lendingkart Group, has reported a sharp financial deterioration for the fiscal year ending March 2025, posting a pre-tax loss of Rs 396 crore.

The unlisted digital lender’s net loss stood at Rs 288.3 crore, a stark reversal from its Rs 60 crore profit in the previous year, as revenues shrank and loan loss provisions surged. The development has triggered a breach of covenant on bonds raised by the company earlier this year.

The company had raised Rs 75 crore through a senior secured bond at 11.25% on January 30, 2024. One of the bond conditions required the firm to remain profitable before tax during its tenure. With that condition now breached, Lendingkart Finance sought a waiver from bondholders last week, said people familiar with the matter.

While the breach technically empowers bondholders to demand accelerated payments or terminate the credit facility, they are expected to waive the covenant, given that coupon payments remain on track and the bonds carry a corporate guarantee from the holding company Lendingkart Technologies Pvt Ltd.

The performance slump coincides with a broader pullback in the fintech and NBFC lending environment. According to a SIDBI report, commercial credit disbursals fell 11% year-over-year in the March 2025 quarter, with private banks registering the steepest decline. Lending activity in the Rs 10 crore to Rs 50 crore ticket size—the core target segment for many fintechs—was especially impacted. Separate data from the Fintech Association for Consumer Empowerment showed personal loan disbursals by fintechs slumped 15% sequentially in Q3 FY25, the sharpest drop since the pandemic’s onset.

Lendingkart, which lends unsecured credit to small and medium businesses, saw its interest income fall nearly 20% to Rs 812.3 crore in FY25. Fee and commission income also dropped 57.5% to Rs 32.2 crore. With revenues under pressure, loan loss provisions more than doubled to Rs 523.5 crore, while overall expenses rose 18.5% to Rs 1,263.5 crore. Finance costs increased 9.9% to Rs 297.8 crore, and employee benefit expenses grew nearly 12%.

Asset quality weakened in parallel. Gross non-performing assets (GNPA) rose to 4.33% in FY25, up from 2.9% a year earlier. Net NPA also edged up to 2.37%. Excluding sovereign credit guarantee schemes such as CGFMU and CGTMSE, however, adjusted net NPA was reported at 1.11%.

The company's loan book contracted 35% to Rs 1,382.3 crore, and its tier-1 capital adequacy ratio dropped sharply to 22% in September 2024, from 34% in March, following regulatory changes from the Reserve Bank of India. The RBI now requires first-loss default guarantees (FLDGs) provided to co-lending partners to be deducted from tier-1 capital. Lendingkart’s FLDG stood at Rs 172 crore as of September, according to a report by ratings agency ICRA.

Despite the financial strain, the company continues to receive backing from existing backers. Fullerton Financial Holdings, a wholly-owned subsidiary of Singapore’s Temasek Holdings, increased its stake in Lendingkart Technologies from 37% to 44% for Rs 77 crore in late 2024 and also issued a Rs 150 crore standby letter of credit.

Since October 2019, Fullerton has invested Rs 799 crore in the group. Lendingkart is now in the process of raising fresh capital, with Fullerton set to acquire a majority stake via a proposed Rs 252 crore infusion, pending regulatory approval.