NBFC loans for MSMEs: Small Industries Development Bank of India (SIDBI), the principal institution of financial lending for MSMEs, and Global Alliance for Mass Entrepreneurship (GAME), a mass entrepreneurship enablement platform, have announced onboarding the first cohort of small or lower-rated non-banking financial companies (NBFCs) to their NBFC Growth Accelerator Program (NGAP).
Launched in June this year, the five-month accelerator programme will focus on capacity building of small NBFCs and helping them access institutional credit at competitive interest rates. While such NBFCs are best suited to fund new-to-credit and micro enterprises in remote geographies, they need adequate funds at a reasonable cost for sustainable development of MSME sector, SIDBI said in a statement.
The programme will offer mentorship from domain experts on verticals such as risk, operations, and technology. It will facilitate peer learning, reviews, and networking through several in-person and virtual sessions.
Sivasubramanian Ramann, Chairman and Managing Director, SIDBI said, “I am confident that a significant number of participants would be able to benefit from the programme and improve their operating parameters and access to institutional funding, which in turn will lead to an increased flow of credit to the MSME sector.”
The key areas of focus during the programme will be to support NBFCs in managing compliances while raising funds from larger NBFCs, providing technology support to develop their technology platform for unwriting MSMEs for unsecured lending, thus reducing the cost of customer acquisition.
Ravi Venkatesan, founder, Global Alliance for Mass Entrepreneurship, said, “NGAP helps participating NBFCs to improve their parameters post the program and be in a better position to apply for funding. We are hopeful that at least 80% of the cohort will receive funding post the program.”
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“Over the next year, we will have a larger pool of lendable NBFCs who can service a large number of MSMEs. The aim is to build capacities of 100+ NBFCs in 3 years thereby enhancing the flow of credit to MSMEs,” added Venkatesan.