The lender, which primarily caters to small and medium-sized businesses and retail borrowers, increased interest income by 113% to Rs 465 crore compared to the same period in fiscal 2019.

However, the uncertainties related to Covid-19 could strain the company’s margins in the current fiscal year as new disbursements are significantly lower than the days before the pandemic.

According to Harshvardhan Lunia, managing director and co-founder of the non-bank lender, the penalties are 50% lower than in January-February, when the company disbursed loans worth Rs 300 crore each month.

“We expect a full recovery by March or April of next year,” Lunia told ET. “However, the only thing about this situation is that we anticipate the recovery and the damage does not last like a flood or a natural disaster.”

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The lender has raised Rs 319 crore in the past 12 months, mostly led by Fullerton, backed by Temasek.

Lunia said the equity infusion is purely for growth and the non-bank’s business model is self-sustaining.

“For the past two years, since the failures of IL & FS and DHFL, banks have been reluctant to lend directly to small businesses. This has opened avenues for us to expand our portfolio, ”Lunia said, adding that the lender has taken a“ co-lending ”approach to accessing liquidity for additional penalties.

In addition, the lender has also benefited from several government programs, including the credit guarantee program, where defaults of certain categories of borrowers are protected up to a certain threshold by the central government.

“Our aim is to close the working capital gap that prevails in high potential micro and small businesses in India, in order to promote financial inclusion and accessibility through our digital channels,” said Lunia.