Arka Fincap, the non-banking financial company (NBFC) arm of the Kirloskar Group on Monday launched a new small ticket loan offering against property for MSMEs. Under its Uday small ticket loan product against property, MSMEs will be able to raise credit ranging from Rs 10 lakh to Rs 30 lakh. The loan product is aimed at businesses in tier II towns and beyond to support their working capital needs. Arka Fincap currently offers up to Rs 5 crore loan against property to MSMEs with a 15-year tenure.
The company has launched the offering with five cities in Tamil Nadu including Salem, Vellore, Tirupur, Porur, and Coimbatore and would later expand the service across the country.
Speaking on the launch, Vimal Bhandari, Executive Vice Chairman and CEO, Arka Fincap said, “By providing quick and reliable access to credit, we can help foster the entrepreneurial spirit in smaller cities and towns, driving growth from the grassroots level. We are committed to creating financial inclusion and supporting the backbone of India’s economy—the MSMEs.”
Started in 2018 as a subsidiary of Kirloskar Oil Engines Limited (KOEL), Arka Fincap operates in MSME & personal lending, corporate lending, real estate & urban infrastructure financing and syndication.
With a CRISIL rating of AA/ Stable for the long term and A1(+) for short-term borrowings with a positive outlook, Arka’s assets under management (AUM) stood at Rs 5,768 crore as of June 30, 2024. The retail AUM constituted 53 per cent of the total AUM.
NBFCs’ role in enabling last-mile credit to MSMEs has gained significance over the years with the government’s aim for financial inclusion of enterprises in India’s hinterland.
Importantly, NBFC loans to MSMEs were over three times that of banks during 2022-23 and till December 2023-24, according to the data from the Reserve Bank of India. The central bank in a report had noted that the co-lending framework for priority sector lending also facilitated the flow of credit by NBFCs to the MSME sector, leveraging on the low cost of funds of banks and the greater reach of NBFCs.
In comparison to the 12.7 per cent and 12.4 per cent year-on-year (YoY) growth in MSME credit by banks as of March 2022 and March 2023, the credit growth by NBFCs to MSMEs stood at 21.2 per cent and 42.4 per cent respectively.
