Credit and Finance for MSMEs: Digital MSME lender Lendingkart on Tuesday announced a co-lending tie-up with financial services company Cholamandalam Investment and Finance Company to disburse working capital loans to SMEs. The partnership will have the capacity to disburse at least Rs 250 crore per annum and help Lendingkart to expand its reach to Tier-2 and 3 cities. The disbursement process will be undertaken by Lendingkart.
“We are putting our efforts together to reach out to each market in India and assist entrepreneurs who are determined to create something of their own. In our journey of promoting financial inclusion in the country, these meaningful partnerships will become our backbone and assist us with required liquidity support,” said Harshvardhan Lunia, CEO & Founder, Lendingkart. The digital lender had earlier entered into co-lending partnerships with Canara Bank and Punjab National Bank as well.
Co-lending as a model (originally known as co-origination of loans by banks and NBFCs) for lending to priority sectors entails joint contribution of credit by both the lenders and also sharing of risks and rewards, according to the Reserve Bank of India. The primary focus of the model is to enhance the flow of credit to the unserved and underserved sectors of the economy and make available funds at an affordable cost. The risk is shared in a ratio of 80:20, 80 per cent loan with the bank and at least 20 per cent with NBFC.
Ravindra Kumar Kundu, Executive Director, Cholamandalam Investment and Finance Company on the partnership with Lendingkart said, “Such partnerships go a long way in helping us towards making our products and services available to our potential customers. This collaboration with Lendingkart will facilitate convenience to those SMEs and MSMEs who are seeking business loans, making the overall process faster and seamless.”
In order to bridge the credit gap for MSMEs, the government has also urged banks and fintechs to collaborate under the co-lending model. According to a PTI report, Hardik Mukesh Sheth, director (banking operations) of the department of financial services on September 23 at a CII event said that the government is pushing the public sector banks (PSBs) to work with the NBFCs and fintech companies to collaborate in the area of co-lending.
Meanwhile, Lendingkart’s disbursals for the first quarter of FY23 were at a record Rs 719.84 crore, up from Rs 123.54 crore during the same period last year, according to the data shared by the company with FEASPIRE. At a group level (technology arm Lendingkart Technologies and lending arm Lendingkart Finance), the company reported a profitable start to FY23 with quarterly profit before tax of Rs 20.66 crore, up 75 per cent from Rs 11.78 crore in Q1 FY22.