Credit and finance for MSMEs: There is more in the process of underwriting loans to MSMEs than accessing the latter’s cash flows in the event of a collateral-free loan. For Shachindra Nath who is the Vice Chairman and Managing Director at NBFC lending to MSMEs U GRO Capital, the lender needs to look at three things to lend; first, his/her intent of giving money, second, how much money he can provide; and third, what growth the borrower will have with the money and whether he/she can pay back.
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However, these three things are a function of MSMEs becoming formal in business in order to avail affordable credit, according to Nath. In an interaction with FE Aspire at the SME Artha 2022 event recently, he talked about the future of balance sheet-based lending to MSMEs, how to choose the right lender and more.