The MSME sector contributes almost 35% of the GDP, employs roughly around 8% of the population and has a credit gap of more than $600 billion.
SMB lending NBFC U GRO Capital, announced its financial numbers on Thursday crossing Rs 1,500 crore of AUM and a monthly disbursement of Rs 250 crore in July 2021. The company, on Wednesday also got listed on the National Stock Exchange (NSE). Previously listed on Bombay Stock Exchange (BSE), it aims to expand access to a larger set of investors and broker network with the NSE listing.
Instituted in 2017, U GRO has a tech-enabled MSME lending business model and is currently serving 9,000 MSME customers. It started disbursement under the co-lending partnership signed under the revised framework with Bank of Baroda from June 2021.
The company’s cumulative disbursement crossed Rs 3,000 crore. The loan book is 74% secured and the largest sectoral concentration is light engineering (29%) and the largest geographical concentration is Delhi NCR (20%).
Shachindra Nath, Executive Chairman and MD, U GRO said, “In our last two and a half years of operation, one whole year was shut down due to the pandemic. It is the base effect which is coming given that our distribution channel for MSMEs is the widest in the country. We have utilized our multiple channels during the pandemic including supply chain financing helping over 152 OEM players and partnership and alliances with 11 underlying fintechs and NBFCs,” he said.
Talking about a renewed focus on MSME lending by fintechs in the last couple of years, he said that the MSME sector contributes almost 35% of the GDP and employs roughly around 8% of our population and is still having a credit gap of more than $600 billion. “Therefore, the growth of the economy is dependent upon credit dissemination. There is a renewed focus because people see this as an opportunity for both the underserved market, where existing SMEs who already have credit facilities need more, and for the market which is not otherwise served,” he added.
He said that India still doesn’t have a large-scale platform, giving or showcasing the path to solve this credit problem. The reason for that is SMEs being a non homogeneous sector with every small business differing from the other.
“Our mission is to build such a large scale platform and solve the problem through use of our deep sectoral focus and technology- data analytics,” he said. He envisions that in the next four to five years, MSME financing in India would reach where consumer financing is today.
In the next five years, U GRO Capital aspires to build an Rs 20,000 crore of asset under management while taking approximately 1% market share of the MSME Credit in India by opening around 270 branches.