SBI, U GRO aims to co-lend loans upto Rs 500 crores to MSMEs by March 2022

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November 17, 2021 1:54 PM

Credit and Finance for MSMEs: The RBI had issued guidelines in November last year under the co-origination model for non-banking finance companies (NBFCs) and banks to jointly lend in order to boost credit access to underserved segments.

MSME share in India’s total gross bank credit stood at 12.04 per cent in September 2021, marginally down from 12.15 per cent in August 2021, as per the data from RBI. (Image: Pixabay)

Credit and Finance for MSMEs: Digital lender U GRO Capital on Wednesday announced a partnership with State Bank of India (SBI) to disburse up to Rs 500 crores by March 2022 through co-lending. The Reserve Bank of India (RBI) had issued guidelines in November last year under the co-origination model for non-banking finance companies (NBFCs) and banks to jointly lend in order to boost credit access to underserved segments. According to RBI, banks take their share of the individual loans on a back-to-back basis in their books in a co-lending model. However, NBFCs are required to retain a minimum of 20 per cent share of the individual loans on their books.

The tie-up will leverage SBI’s prowess on the liability side and U GRO Capital’s origination and distinctive underwriting engine capabilities on the assets side, U GRO said in a statement. Credit will be extended under U GRO’s Sanjeevani programme up to Rs 3 crore. The Sanjeevani programme was launched in June last year and has disbursed over Rs 750 crores, as of October 31, 2021. U GRO would integrate with the bank on its GRO–xStream platform. The company has on-boarded over 15 fintech/NBFC partners on the asset side and banks on the liability side. It already has a co-lending arrangement with Bank of Baroda and IDBI Bank.

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“This collaboration will further enhance our distribution network, as we aim to extend our credit reach to more MSMEs,” said Dinesh Khara, Chairman, State Bank of India in a statement. Shachindra Nath, Executive Chairman and Managing Director, U GRO Capital said, “We believe that next decade is all about collaboration between large banks and niche NBFCs/fintechs wherein lending-as-a-service would become the prominent force.” U GRO has 55 branches across 9 states and aims to expand the branch network to 100 by FY22. The company said it aims to achieve 1 per cent market share of outstanding MSME credit in India by 2025.

MSMEs’ share in India’s total gross bank credit stood at 12.04 per cent in September 2021, marginally down from 12.15 per cent in August 2021, as per the data from RBI. Total bank credit deployment in September to MSMEs was Rs 13.20 lakh crore while overall gross bank credit stood at Rs 109.56 lakh crore.

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