Kinara Capital, an MSME lender backed by Nuveen Global, is facing significant financial challenges. The company is working to sell some of its stressed assets while grappling with breached financial covenants totaling Rs 1,772 crore related to its borrowings.
As of December 31, 2024, the lender has violated certain covenants, largely due to elevated Gross Non-Performing Assets (GNPAs), reduced profitability, and other factors. The total outstanding principal amounts to Rs 2,245 crore, with Rs 1,772 crore currently in breach, according to filings.
Some of its lenders have already taken action but have not yet recalled any loans. Kinara Capital is continuing to seek waivers from the remaining lenders.
This financial strain is part of a larger trend affecting the Non-Banking Financial Company (NBFC) sector, particularly those involved in unsecured MSME lending.
The Reserve Bank of India (RBI) has implemented stricter regulations on unsecured lending over the past 18 months, while rising interest rates have further weakened borrowers’ ability to repay, contributing to higher delinquency rates.