Local fintech PayMedia secures Rs.85mn funding from NDB

Recently, the ICTA unveiled a credit scoring framework as part of its efforts to support start-ups. Developed in partnership with PwC, the framework helps banks identify the creditworthiness of start-ups that apply for loans. 

The initiative addresses a fundamental issue that has hindered the growth of Sri Lankan tech start-ups. Already, it has begun helping local start-ups. Recently, local fintech start-up PayMedia secured an Rs.85 million loan from NDB because the bank adopted this framework.

Since its founding in 2014, the start-up has worked closely with the banking industry. The company was the first to introduce real-time cash deposit machines to Sri Lanka and has developed a range of payment solutions. Over the years, the company has won several awards for these products. It has also launched a subsidiary called DirectPay, which specialises in digital payments and recently crossed the milestone of processing Rs.3 billion payments.
Despite its close relations with the banks, it was a time-consuming process to get funding from them.  PayMedia Founder and CEO Kanishka Weeramunda elaborated saying, “It can take anywhere between four to six months to get a response. After four months, then you’ll hear, ‘We’ll fund 50 percent of the project.’ But as a start-up, you can’t do anything with that because you need the 
remainder too.”

The new credit scoring framework helps bridge the gap between Sri Lankan banks and start-ups. The ICTA had developed it working with PwC alongside an industry-led steering committee. The framework evaluates start-ups based on four key factors. They are the capability of the founders and management team, market potential of the start-up, its product/service and financial health of the start-up. By focusing on these four factors, it’s now possible for banks to analyse a start-ups’ intangible assets when assessing its creditworthiness. 

Several banks have started looking at implementing the framework to give loans to start-ups. Among the first banks to adopt it is NDB. 

Speaking to Arteculate, NDB Kohuwala Branch Manager Kuraish Sappidin commented, “This framework is a positive move from the ICTA and PwC for the growth of the banking industry. It offers a great opportunity for start-ups to work with the banks and grow their business.” 

As a start-up founder, Weeramunda described the framework as a game-changer. Thanks to it, PayMedia secured an Rs.85 million loan from NDB. 

He went onto share, “In the past, funding from banks was out of the question for start-ups. The most viable option was giving up equity to investors. But now a founder doesn’t need to give up equity or provide collateral to obtain funding.”

As the Sri Lankan technology industry grows, the credit scoring framework by the ICTA and PwC removes a key barrier for the continued growth of start-ups. Moreover, with PayMedia obtaining the Rs.85 million loan from NDB, the road ahead looks optimistic.