Credit and Finance for MSMEs: U GRO Capital, a BSE-listed smaller small business lending fintech platform, today announced the co-lending partnership with Bank of Baroda for micro, smaller and medium enterprises (MSME).
Under the co-lending programme Pratham, Bank of Baroda and U GRO will collectively disburse loans worth Rs 1,000 crore to MSMEs, Shachindra Nath, U GRO Capital’s Managing Director told TheSpuzz Online. The aim is to dispense the complete quantity by the finish of this monetary year, he added.
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As per the Reserve Bank of India’s (RBI) revised co-lending regulation, 80 per cent of the loan portfolio will be on the bank’s balance sheet and the remaining quantity will be offered by the NBFC companion. In this case, U GRO will be accountable to supply, underwrite, and disburse the loan from its platform, immediately after which, 80 per cent of the loan will get transferred to Bank of Baroda’s balance sheet. In November last year, the regulator permitted banks and NBFCs to jointly co-originate loans for lending to the priority sector.
MSMEs who have credit threat rating CIBIL MSME Rank from one to 5 (CMR 1 is the least risky MSME) will be eligible to leverage this facility.
“Since this partnership gives us the ability to lower the cost of liability for MSME customers, the loans are in the price band of 8- 10 per cent,” stated Nath.
Through this programme, MSMEs can raise credit from Rs 50 lakh to Rs 2.5 crore with a maximum tenure of 120 months. The loan disbursement began on Tuesday on Bank of Baroda’s 114th Foundation Day.
The programme is accessible to MSMEs across U GRO’s more than 200 channel touch points about nine places in Delhi, Jaipur, Ahmedabad, Pune, Mumbai, Bengaluru, Chennai, Hyderabad, and Kolkata.
On the launch, Nath stated, “I firmly believe that the future of NBFCs in India lies in the co-lending partnerships. If this association succeeds it will open up the market for newer models of co-lending.” He explained that co-lending is a extended drawn procedure for the reason that when a bank co-lends with an NBFC it has to adopt the latter’s credit policy, realize its methodology of underwriting, and do the essential due diligence. Also, technologies has to be integrated for the reason that when the loan is authorized, the portfolio and the repayment have to be bifurcated amongst the two lenders.
“We believe that forging such partnerships is the way forward and collaborative efforts leveraging individual entities’ expertise are of utmost importance to take co-lending to MSME segment to the next level,” stated Vikramaditya Singh Khichi, Executive Director, Bank of Baroda in a statement by U GRO.