Payments company Mastercard on Thursday announced a partnership with MSME lender U GRO Capital to offer short-term loans as a digital supply chain financing solution to dealers/distributors and last-mile retailers, among other small merchants and women entrepreneurs. While Mastercard through its vast network will bring together the demand and supply side ecosystem stakeholders to facilitate support to small businesses, U GRO Capital will leverage its proprietary underwriting and cash flow-backed assessment model to offer credit.
Vikas Varma, Chief Operating Officer, South Asia, Mastercard said, “Mastercard understands the substantial challenges faced by MSMEs in accessing capital, thus, posing a barrier to the growth of their businesses. The credit gap requires a collective effort, and it is imperative to forge the right partnerships within the ecosystem to overcome the existing divide.”
For the uninitiated, a June 2019 report by the UK Sinha Committee constituted by the Reserve Bank of India had estimated Rs 20-25 lakh crore credit gap in the MSME sector.
“We are confident to onboard millions of small businesses through the Mastercard network, thereby magnifying our collective impact on the MSME sector. This alliance, underpinned by innovation and a shared commitment, holds the potential to be a pivotal force in addressing the intricate credit needs of MSMEs nationwide,” said Shachindra Nath, Vice Chairman and Managing Director, U GRO Capital.
The collaboration with U GRO Capital is in line with Mastercard’s earlier announcement to get 1 billion people and 50 million micro and small businesses, including 25 million female entrepreneurs into the digital economy by 2025.
U GRO Capital had raised around Rs 240 crore in July this year from the Investment Fund for Developing Countries (IFU), a Danish development finance institution providing risk capital to help MSMEs transition to greening their business operations.
In terms of bank credit to MSMEs, scheduled commercial banks had deployed Rs 21.69 lakh crore to MSMEs under priority sector lending in September 2023, up 17.2 per cent from Rs 18.50 lakh crore deployed in September 2022, according to the latest data on sectoral deployment released by the Reserve Bank of India (RBI).
