Strengthening The Auto Financing Sector With Digital Tools And Technology, Says Karamveer Dhillon

Mr. KaramVeer Dhillon, Co-Founder and CEO, Perpetuity Capital shared his business journey in an exclusive interview with Outlook India. He also added specific insights in the field of commercial vehicle financing and electric vehicle financing. 

Please tell us about the business model of the company? What are the services offered by you?

Perpetuity Capital is a Non-Banking Financial Company (NBFC) which primarily provides commercial vehicle financing to the unbanked population at competitive rates. The company borrows from banking and lending institutions and further lends out retail small ticket loans. The focus has remained on Commercial Vehicle (CV), Personal Vehicle (PV) and used PV loans. Perpetuity Capital offers loans at reasonable rates, has flexible tenure loans which reduces the EMI burden on first time borrowers,  and quick loan processing and turnaround time (48 hours) with the help of our technology and integrated API’s which verifies documents instantly.  It aims to establish its mark and compete with the incumbent NBFCs (Manappuram Finance, Tata Capital, Shriram Transport Finance, etc.) and Digital Lending Platforms in providing the best services in the sector. And in process, carving its own niche, that would be an amalgamation of already existing financing systems in the market.

When talking about commercial vehicle lending, there are several players in the market. What is the competitive advantage that Perpetuity Capital has to offer?

Perpetuity Capital aspires to become a one stop shop for vehicle financing in India and eventually collateralized financing in India. The platform has a hybrid model as compared to captive NBFCs  whose model is completely offline and broker driven. We have a combination of offline and online to source loans and go well beyond the traditional data points (IT returns, banking footprint) when underwriting credit to understand their ability to service a debt. The firm is looking forward to streamline and simplify the lending process in financing and refinancing of the automotive sector.

How do you verify the credit worthiness of borrowers, in particular small businesses?

Perpetuity Capital does not provide MSME/Business loans though we do lend to MSMEs for their logistics and mobility needs. We gauge a business’s creditworthiness by looking at recurring and contractual revenue to better understand their ability to pay back. Specifically, we look at the age of the vehicle, the age of the borrower relative to the segment he/she works in, borrower’s fleet size, demographic details, dependents, etc before creating a credit profile.

How are you so uniquely positioned to provide loans at a competitive rate ?

Competing at a competitive rate all comes down to your cost of capital in the NBFC business. The lower your cost of capital, the higher your interest margins. Initially, we bootstrapped the company and managed to raise 50 lakhs in unsecured debt financing. Moving ahead, we are looking to raise both equity & debt financing to grow our loan book.

How Non-bank lenders eye electric vehicle financing?

Electric vehicle financing is still at a very nascent stage, most banks and NBFCs are still hesitant as the EV industry is yet to go through a full business life cycle. So, we do not know how many aspects of this might play out, specifically, resale value of EV’s. We are also eyeing for the growth of electric two-wheelers and three-wheelers space which will further enhance the disbursements. Currently EV OEMs operate their own loan systems for the end users, as the user awareness and adoption will increase, so will be the avenues for customers to procure loans. As non-bank lenders ourselves, we see this as a fast growing opportunity within the commercial EV space. Our CV customers will organically migrate to CEV and so will our business. That said, we are optimistic that this will be a massive piece of the total pie as EVs go mainstream, and India curbs the use of combustible engine vehicles.  

What are the company’s goals for the next year?

Perpetuity Capital is currently working towards strengthening its customer base. In the coming years, we are looking forward to integrating new technology within our platform and launching our application. The application will be available both on Android and iOS. Parallely, we are working towards growing our loan book to over 50 CR. This also includes our plans to expand to different locations across the country.