Reliance Group eyes e-commerce for commercial finance biz

Betting big on supply chain financing for e-commerce vendors, Reliance Commercial Finance has tied up with e-retail giant Snapdeal and is in talks with various other leading players including Flipkart and Amazon.
In the first phase, Reliance Commercial Finance (RCF), part of Anil Ambani-led Reliance Group's financial services arm Reliance Capital, will offer supply chain financing to a select set of over 80,000 Snapdeal vendors across the county.
"E-commerce is a growing opportunity that integrates with thousands of suppliers in servicing product request and ensure delivery.
"We have launched a new e-commerce centric supply chain financing product that will help us offer customized options to these vendors. Increasingly we will tie up with prominent e-commerce players to offer this to their vendors," RCF's CEO K V Srinivasan said.

RCF is looking to further expand its e-commerce supply chain financing portfolio and has begun discussions with Amazon and Flipkart as also various other e-commerce firms.
Srinivasan said e-commerce companies manage thousands of vendors across categories and roughly five per cent of these vendors have strong credentials and are eligible for offering financing options.

"This provides a huge opportunity for the lending firms. We see this portfolio growing. Our average financing has been to the tune of Rs 20 lakh and is based on a rating system developed by the platform itself. This helps us get the best in the lot - limiting our risk and exposure," he added.

As per industry estimates, e-commerce is a USD 38 billion opportunity and is growing at a rapid rate in India.
RCF currently has a Rs 1,000 crore book from supply chain financing and expects to grow this portfolio to Rs 1,500 crore by the end of the calendar year - marking a 50 per cent jump.
The company expects over 10 per cent of its total supply chain portfolio to come from supply chain financing for e-commerce vendors by the end of this year.
Supply chain financing for vendors of e-commerce companies has been gaining momentum in recent years as leading players like SnapDeal and Flipkart helping their vendors manage their finances which, in turn, ensures credible delivery eco-system for the platform.

However, the average size of such financing is only about Rs 20-30 lakh and the business also gets impacted by seasonal trends, due to which not many large players and banks have shown a keen interest and the space is therefore left open for the NBFCs largely.