Credit and finance for MSMEs: MSME lending non-banking financial company Red Fort Capital Finance on Thursday announced a Rs 20-crore term loan sanctioned by public sector lender State Bank of India (SBI) for onward lending to MSMEs. Red Fort Capital finances secured business loans to MSMEs for working capital requirements or equipment and machinery purchases between Rs 1 crore and Rs 10 crore with a turnaround time (TAT) of seven days. The NBFC caters to enterprises in manufacturing, logistics, FMCG, IT, textiles, education, etc.
“This term loan by SBI underscores that India has strong business fundamentals and poor business credit penetration. With the business credit demand rapidly accelerating, Red Fort estimates that the credit penetration will be 3x in the next decade,” said Parry Singh, CEO, Red Fort Capital Finance in a statement.
Also read: NBFC loans to MSMEs jump 14% in FY22 from 2.8% in FY21: RBI report
The loan from SBI will help Red Fort Capital Finance in maintaining adequate liquidity in alignment with its plans to further expand its asset under management (AUM) to Rs 100 crores by the end of the current fiscal. “The NBFC seeks deals that offer a strong collateral cover and growing business cash flow and has a healthy well-diversified book with zero NPA,” the company said.
Existing businesses are required to have a minimum annual turnover of Rs 50 lakh to raise collateral-backed loan from Red Fort Capital Finance while new businesses with over Rs 30 lakh revenue are eligible to secure credit.
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Importantly, SBI has been signing pacts with multiple lenders such as ECL Finance, Yubi, Capri Global Capital, U GRO Capital, etc., for co-lending to MSMEs. Its SME loan portfolio grew by 13.24 per cent in the second quarter ending September of the current fiscal from the year-ago period and 10.01 per cent during Q1, according to the bank’s quarterly results.
Meanwhile, credit by NBFCs lending to MSMEs in the country grew 14.6 per cent in FY22 with around more than Rs 1.75 lakh crore extended in comparison to 2.8 per cent growth with around Rs 1.55 lakh crore extended in FY21, according to the provisional data from the Reserve Bank of India (RBI), indicating disbursements under schemes such as the Emergency Credit Line Guarantee Scheme (ECLGS). The growth was higher among MSMEs in the services segment.