MSME lenders U GRO Capital and Kinara Capital to co-create Rs 100 crore small business loans


In 2018, the RBI issued guidelines on loan coordination by banks and NBFCs to help old priority sector loans made possible by the reach of NBFCs.

Credit and financing for MSMEs: Lenders MPME U GRO Capital and Kinara Capital on Wednesday announced a strategic combination to provide unsecured loans to small businesses. Through the partnership, the two companies are looking to pay around Rs.100 crore over the next eight to twelve months to MSMEs in manufacturing, trade and services. The Reserve Bank of India (RBI) had issued guidelines in 2018 on the coordination of loans by banks and non-bank and financial corporations (NBFCs) to help old priority sector loans made possible by the scope of NBFCs.

“We are focusing on the market for lending small notes below Rs 10 lakh, which means our average note size is around Rs 3-4 lakh. Through this merger, we plan to lend approximately 3,000 to 4,000 loans over the next eight to twelve months. Most of the MSMEs we lend to are in automotive machinery and component manufacturing, food production, textiles, wholesalers, retailers, building material suppliers, etc. Our client profile is usually a first generation entrepreneur with a monthly turnover of Rs 5-6 lakh, “Hardika Shah, founder and CEO of Kinara Capital, told Financial Express Online. Loans would range from Rs 1 lakh to Rs 30 lakhs with 12 to 60 months of seniority.

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The co-origin partnership will leverage U GRO’s analytics-driven decisions and API integration with Kinara Capital’s smart technology platform, according to a company statement. U GRO also co-lends with banks and financial institutions and has signed more than 15 co-originauntil now partnerships with multiple partners. “We are convinced that co-origination with fintech is one of the most effective ways to achieve financial inclusion of MSMEs, which prompted us to design our ‘Gro X-stream’ technology platform, enabling essential collaborations like this to flourish, “said Shachindra Nath, Executive Chairman and CEO, U GRO.

As part of the reconciliation, MSMEs are expected to apply for loans from Kinara Capital to get the process started online, over the phone, or in person with a Kinara representative. Once the application is approved, the loan sanction documents will include the names of U GRO Capital and Kinara Capital. Customer support will be handled by Kinara Capital.

In addition, Kinara Capital will guarantee the loans as part of this combination and will share the requests with U GRO. “Once we’ve done that, they (U GRO) can subscribe in their own way and let us know if they will participate or not. If they don’t participate, we will continue to do so (lend) on our balance sheet, ”Shah added. Kinara Capital’s annual net non-performing assets (NPA) is approximately 1 to 1.5%.

According to the central bank, the co-origination model “should involve a joint contribution of credit at the facility level, by the two lenders” and “It should also involve the sharing of risks and rewards between the bank and the NBFC for ensure proper alignment of business objectives. “

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