Hardika Shah, Founder, Kinara Capital
| Photo Credit:
Rahul M Sindhe
Bengaluru-based MSME lender Kinara Capital is facing a deepening liquidity crisis after a group of its lenders moved to appropriate fixed deposits and recall loans, prompting ICRA to downgrade its credit ratings. The latest downgrade comes on the heels of similar actions by India Ratings and Care Ratings in June, reflecting mounting concerns over the company’s financial health.
In its rating note, ICRA cited severe deterioration in Kinara Capital’s liquidity position, following the loan set-offs against its bank balances and the appropriation of lien-marked deposits by a section of lenders. The agency also flagged that such actions could set off a chain reaction, potentially triggering early redemption clauses from other lenders and putting further pressure on the firm’s liquidity in the near term.
The company is said to be weighing several options, including the sale of assets and corresponding liability transfers, as it attempts to stabilise its position.
Founded in 2011 by Hardika Shah, Kinara Capital offers unsecured business loans to micro, small and medium enterprises (MSMEs), primarily via its digital lending platform, myKinara. Over the years, the fintech lender claims to have disbursed more than ₹4,000 crore to over 50,000 borrowers, and has a physical presence through 130 branches.
However, the company’s financial metrics have weakened sharply in the past year. For FY25, it posted a standalone net loss of ₹351 crore, a sharp reversal from a ₹62 crore profit in the previous fiscal. Total income also declined 18 per cent year-on-year to ₹601 crore, while assets under management (AUM) fell 9.6 per cent to ₹2,841 crore as of March 2025, from ₹3,142 crore the year before. The contraction in AUM was partly attributed to the company adopting a more cautious lending stance amid rising delinquencies.
As of June, Kinara Capital had outstanding debt of ₹1,853 crore from 46 lenders, according to ICRA. The firm has so far raised around $178 million in funding from backers such as Impact Investment Exchange (IIX), BlueOrchard, British International Investment, Nuveen, and Triple Jump’s AMP Fund.
Published on August 2, 2025
