Credit and Finance for MSMEs: Owing to the pandemic, banks have turn out to be averse to issuing credit card facilities to MSMEs even as there is a require by such enterprises for credit cards to spend for employee salaries, invest in goods, handle working capital, and so on., according to Shachindra Nath, Executive Chairman and Managing Director at tiny small business lending fintech platform U GRO Capital. The firm on Thursday had announced an MSME-focused co-branded credit card resolution in partnership with SBM Bank India, a step-down subsidiary of SBM Holdings (erstwhile State Bank of Mauritius), powered by RuPay and EnKash.
“As per our internal study, U GRO Capital’s 50 per cent SME customers possessed credit cards offered by the banks while the remainder never had a credit card. Promoters utilized personal credit cards for business-related transactions, which needed to be segregated from personal transactions,” Nath told TheSpuzz Online. U GRO is searching to obtain a 1 per cent market place share of the SME lending market place by 2025 which translates to about Rs 20,000 crore asset below management. With this collaboration, Nath now seeks a contribution of an incremental about 5 per cent of the AUM target. According to the World Bank estimates, the MSME credit gap is at $380 billion (about Rs 28.34 lakh crore).
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India has constantly had a low penetration of credit cards. The quantity of credit card customers in India stood at 52 million in 2019 but there had been only about 3 credit cards for each one hundred individuals in India vis-à-vis 32 cards in the USA, according to a study by ResearchAndMarkets. Corporate credit cards are probably tools for SMEs and startups to increase their working capital specifications along with getting the flexibility to spend the bank at a later date. This also assists in expediting supplier payment and early payment discounts. “The objective behind the launch of the product is to provide a bundled offering to the customers looking for instant card facility along with a business loan. The initiative also assists the businesses to create a long-term asset in the form of a Fixed Deposit, at an attractive rate of return,” mentioned Nath.
The credit card can be availed by the U GRO Capital borrowers against a fixed deposit with SBM Bank India. The facility would be accessible for self-proprietors searching for secured small business loans, unsecured small business loans, and machinery loans from U GRO Capital. There is no turnover limit to avail this facility. It would be extended to other varieties of firms as effectively such as like partnerships, private restricted, amongst other people, in close to future.