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Electric vehicles (EVs) have a lot going for them—increased consumer interest across segments, government support, and improving technology—but a major stumbling block is their cost. They are almost twice as expensive as those that run on ICE engines.

This is where Mufin Green Finance wants to make a difference by providing digital lending options to EV users. 

Founded by Kapil Garg and Rajat Goyal, Mufin Finance Group, under the parent company Hindon Mercentile Limited, began financing e-rickshaws in 2016 in the Delhi-NCR region. This March, Mufin, with an intent to expand its core EV financing product and focus on green financing, bought and renamed the listed entity ‘APM Finvest Ltd’ to ‘Mufin Green Finance Limited’. 

The focus of Mufin Green Finance is to provide income-generation loans to users adopting green technology.

The startup is keen to increase the penetration of green vehicles in the country by adding more green financing products to its portfolio. 

The pure-play EV-focused NBFC has today expanded its portfolio to include financing of electric two-wheelers, three-wheelers and four-wheelers, and other components of the EV ecosystem such as EV chargers, charging stations, and swappable and non-swappable batteries.

The startup has expanded its operations to Bihar, Uttar Pradesh, Uttarakhand, Madhya Pradesh, Haryana, Rajasthan, and eastern India. 

Creating an impact

Through its EV leasing solutions, income-generation loans and e-rickshaw loans, the startup envisions improving the livelihood of communities in rural and semi-urban areas. The company says it focuses on the upliftment of the “un-bankable” people of society. 

“We are impacting livelihood in rural and semi urban via retail finance by giving users an income-generation loan or e-rickshaw loan. By taking this loan he/she is able to earn Rs 800-1,200 per day depending on the location,” says Kapil Garg, Co-founder and MD, Mufin Finance Group. 

According to the company, it has reduced over 100,000 tonnes of carbon emissions through the EVs it has financed. This number was arrived at using the Niti-Ayog calculator, based on the number of vehicles financed and what they would save as carbon credits over their life span. 

Business model and traction

Mufin Green Finance adopts a phygital approach, combining the strengths of an NBFC and a fintech. The entire customer journey to apply for the loan is paperless and done through a digital platform, says the company’s founder. 

As part of its B2C approach, the company leverages two-wheeler and three-wheeler OEMs (original equipment manufacturers) and their dealer-partners to reach out to consumers for various loans, along with service support. The startup’s clients include Hero Electric, Okinawa, TVS, Saarthi, and Piaggio. 

In the B2B business model, the company owns the EV assets and provides them to fleet operators on operating lease/financial lease. To enable this, Mufin has collaborated with electric two-, three- and four-wheeler operators, including Zypp, Alt Mobility, Smart E, Zyngo, LoadExx, Lithium, and Blu Smart Mobility. 

Mufin Green Finance has been instrumental in bringing EVs worth over Rs 249 crore on Indian roads since 2016 and has financed 20,227 electric vehicles so far. It has disbursed loans worth more than Rs 208.48 crore since inception. A chunk of the company’s portfolio is in the rural and semi-urban areas: it has disbursed more than Rs 125 crore in these areas. 

In October 2022, the company disbursed loans for 3,533 EVs. It plans to reach a monthly disbursement of 4,000 electric vehicles by 2022. Its current disbursement value is over Rs 25 crore a month.

The company aims to reach an AUM (assets under management) of $100 million by the next financial year (FY2024) from its current AUM of $20 million. 

Currently, Mufin Green Finance has a team of over 150 members across nine states, with expertise in EV industry, banking, financing and technology. 

EV financing market 

The EV financing market is expected to grow to Rs 40,000 crore by 2025, according to a report titled ‘Banking on Electric Vehicles in India’ by government think-tank NITI Aayog and the Rocky Mountain Institute India. 

As per data from Electric Mobility Financiers Association of India, in the last year, the number of EV finance players has grown from 4 to 13 and overall disbursements have grown 50% to Rs 1,000 crore. 

Market challenges

Various lenders today fear financing the EV segment due to the challenges in the market. Dependence on imports for batteries and scarcity of lithium-ion batteries act as impediments for companies to invest in India’s EV industry. Banks and NBFCs are not forthcoming to finance EVs due to product risk, credit risk, and the lack of a second-hand market for electric vehicles. 

“In spite of this, with our experience of 6 years in the EV segment as a group, we have been able to keep our net NPAs as less as 1.92% despite the pandemic,” says Rajat Goyal, Co-founder and Chief Risk Officer, Mufin Group.

The company says it is well-capitalised and has a “robust” collection process, which includes daily, weekly, half-monthly and monthly payments. It raised Rs 45 crore from Incofin Investment this October.

Mufin Green competes with players such as Revfin, Aakasa, IDFC First and Bajaj Finserv.

Road ahead

Commenting on the business’s growth plans, Kapil says, “We are currently operating at a market share of 7% across various territories in the northern and eastern Indian regions. Standing at a net worth of Rs 150 crore, we plan to multiply our portfolio by at least 20X in the next three years, tapping new territories and products which drive green penetration in India.”

The company intends to expand to all parts of India by December 2023. 

Mufin Green Finance plans to disburse loans worth Rs 5,000 crore over the next five years. The startup also plans to venture into other green financing products, such as solar panel financing, by 2023.