Tag: MSME

Bank of Baroda, U GRO Capital launch co-lending platform ‘Pratham’

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Bank of Baroda and fintech platform U GRO Capital have launched a co-lending platform Pratham, under which ₹1,000 crore loan will be disbursed to the MSME sector in the country.

Commencements of loan disbursements under Pratham mark the 114th Foundation Day of Bank of Baroda, U GRO Capital — tech-focussed small business lending platform — said in a release on Wednesday.

“Pratham, a ₹1,000 crore co-lending programme, will allow the MSMEs to avail customised lending solutions at a competitive rate of interest with a significant reduction in turn-around time, it said.

The loan amount ranges from ₹50 lakh to ₹2.5 crore to be offered at an interest rate starting from 8 per cent with a maximum tenure of 120 months, it said.

“We believe that forging such partnerships is the way forward and collaborative efforts leveraging individual entities’ expertise are of utmost importance to take co-lending to MSME segment to the next level. This is a significant advancement in the same direction,” said Vikramaditya Singh Khichi, Executive Director, Bank of Baroda.

Support to MSMEs

The co-lending programme resonates with the bank’s intent to extend support to more micro, small and medium enterprises (MSMEs), he said.

The partnership with Bank of Baroda will enable the company to support more MSMEs in the remotest locations, and to help them revive and grow, Shachindra Nath, Executive Chairman and Managing Director, U GRO Capital, said.

With technology and sectoral expertise, U GRO Capital will solve the unsolved credit needs of such small businesses, he said.

Pratham requires minimum documentation for loan, said the company.

Company’s proprietary developed platform GRO-Xstream allows faster turnaround time, with an in-principle approval issued within 60 minutes, U GRO Capital said.

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U GRO Capital, Bank of Baroda in tie-up for ₹1,000-crore MSME co-lending

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U GRO Capital on Wednesday announced the launch of a co-lending partnership for micro, small and medium enterprises with Bank of Baroda.

Called Pratham, it is under Reserve Bank of India’s revised co-lending guidelines.

It is a ₹1,000-crore co-lending programme that will allow MSMEs to avail customised lending solutions at a competitive rate of interest with a significant reduction in turn-around time, U GRO Capital said in a statement.

U GRO Capital launches GRO Micro, adds 25 branches

The loan amount ranges from ₹50 lakh to ₹2.5 crore and will be offered at an interest rate starting from 8 per cent with a maximum tenure of 120 months.

Accessible at nine locations

“We believe that forging such partnerships is the way forward and collaborative efforts leveraging individual entities’ expertise are of utmost importance to take co-lending to MSME segment to the next level,” said Vikramaditya Singh Khichi, Executive Director, Bank of Baroda.

MSMEs including the recently added wholesale and retail traders under priority sector can avail credit through this programme, which is accessible at nine locations.

A call to preserve the ‘value’ of MSMEs at any cost

“The partnership is a reiteration of the value and trust that the bank places on our ability to leverage sectoral expertise and technology to solve the unsolved credit need of the MSMEs,” said Shachindra Nath, Executive Chairman and Managing Director, U GRO Capital.

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Around 1.09 crore MSME borrowers gets guarantee support under ECLGS, BFSI News, ET BFSI

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New Delhi, Jul 19 () Around 1.09 crore MSME borrowers have been provided with guarantee support amounting to Rs 1.65 lakh crore as of July 2 this year under the Emergency Credit Line Guarantee Scheme (ECLGS), Parliament was informed on Monday. The scheme is part of the Aatmanirbhar Bharat Abhiyaan package announced by the government to mitigate the distress caused by the lockdown due to COVID-19 by providing credit to different sectors, especially MSMEs.

“As part of the Aatma Nirbhar Bharat Abhiyaan, under the ECLGS, around 1.09 crore MSME borrowers have been provided with guarantee support amounting to Rs 1.65 lakh crore as on July 2, 2021,” MSME Minister Narayan Rane said in a written reply to the Rajya Sabha.

In another reply, he also said that as of July 2, 2021, an amount of Rs 2.73 lakh crore has been sanctioned under the scheme, of which Rs 2.14 lakh crore has been disbursed. RR BAL



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Chairman, BFSI News, ET BFSI

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HDFC Bank, largest lender by market capital, has created a new business segment of commercial and rural banking to capture the next wave of growth, said Atanu Chakraborty, the bank’s non-executive chairman, in the annual general meeting held on July 17.

“This will not only reinforce your bank’s top position in the MSME segment but also strengthen efforts to serve customers in both India and Bharat,” Chakraborty said, adding that the tech savvy young customers too would be benefited out of this move.

The delivery channels will be complemented with digital marketing, even as your bank leverages the branch channel and virtual relationship channel.

This was Chakraborty’s first AGM after the Reserve Bank of India approved his appointment in April for a period of three years. Chakraborty, a 1985 batch IAS officer of Gujarat cadre, earlier retired as secretary of department of economic affairs in the central government more than a year ago.

The bank continues its focus on corporate and Government business to drive growth.

Chakraborty put emphasis on being “future ready”, a key lubricant for growth in coming days. This, according to him, means that growth engines of corporate banking, MSME, agricultural and rural, government and institutions banking and others will be powered by robust technology and digital platforms.

“These growth engines will account for the bulk of our future investments and can be broadly classified as Business Verticals and Delivery Channels,” said Chakraborty.

During April-June quarter, HDFC Bank reported a 16.1 percent year-on-year growth in standalone profit at Rs 7,730 crore, its slowest pace since December 2016. It was lower than Rs 7,931 crore estimated by analysts in a Bloomberg poll.

In between, the chairman highlighted the lender’s efforts for environment, social and government or ESG, a global cult that qualifies for a cheap international cash pool.

“The bank has taken cognizance of ESG in its business plans and has put in place a broad strategy, which will be fine-tuned as we move ahead,” said Chakraborty.

“Your bank realizes the importance of environment protection and that it is a vital aspect within the ESG framework.”

During the pandemic many bank employees suffered due to the infection. The chairman made a special mention for those as he credited the bank for running bank operations seamlessly braving the odds.

“Many of them lost their lives. They are our unsung heroes. I join all of you in paying my respects to them,” he said.



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MSME loans risky even as banks transmitted rate cuts the most, BFSI News, ET BFSI

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Even as banks have transmitted rate cuts most to the MSME sector and education loans during pandemic, they are still perceived to be risky. The spread over one year benchmark lending rate is highest for such loans, according to a study by RBI economists

Spreads of weighted average lending rates (WALRs) on fresh rupee loans over 1-year marginal cost of funds-based lending rate (MCLR) for loans to MSME was 179 basis points (bps- one bps is 0.01 per cent) in May, factoring the median WALR at 7.28 per cent even as banks transmitted 132 bps of policy rate cuts during the pandemic between April 2020 and May 2021, analysis by the economists in a study published in the latest monthly bulletin showed. Such spread for education loan was 219 per cent and the banks transmitted 162 basis points. Put simply, even though these loans are risky, lending rates were lowered to revive activities.

“Despite the restructuring, however, stress in the MSME portfolio of PSBs remains high” noted RBI’s latest financial stability report (FSR). ” Given the elevated level of debt of the stressed cohort, the implications of business disruptions following the resurgence of the pandemic could be significant.”

” (The spreads) were uneven across sectors reflecting their varied credit risk profiles and business strategies followed by banks” the study noted. The spread was among the lowest in respect of housing loans, reflecting lower defaults and the availability of collaterals and highest for personal loans . “Personal loans (other than housing and vehicle loans) are mostly unsecured and involve higher credit risk and hence, the spread charged was the highest for other personal loans”. But in terms of transmission, personal loans were lower by only around 100 bps points during the period.

Boosted by The Emergency Credit Line Guarantee Scheme (ECLGS) disbursements to eligible categories, net credit flow to stressed MSMEs during March 2020-February 2021 rose to Rs 50,535 crore with the shares of public sector banks and private sector banks at 54 per cent and 35 per cent, respectively, according to the latest Financial Stability Report. The Emergency Credit Line Guarantee Scheme provides 100% guarantee to banks for loan portfolio of up to Rs. 3 lakh crore to eligible MSMEs.

“Going forward, close monitoring on asset quality of MSME and retail portfolios of banks is warranted” the financial” the FSR noted.

Rating agencies have warned of balance sheet implication for banks. “The reduced dent on the balance sheet of financial institutions over the last year may deepen further in case the regulator withdraws its supportive stance to eligible segments under the retail, agriculture and MSME industry” said the July review by Brickwork Ratings.



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Razorpay acquires TERA Finlabs – The Hindu BusinessLine

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Razorpay on Monday announced its acquisition of TERA Finlabs, an AI-based risk tech SaaS Platform, for an undisclosed amount. 

“TERA Finlabs is a Bengaluru-based startup that provides technology, risk and capital solutions to enable innovative embedded financing solutions for businesses,” it said in a statement. 

TERA Finlabs is an Indian subsidiary of UK-based digital lender GAIN Credit.

Harshil Mathur, CEO and co-founder, Razorpay said, “The team at TERA FinLabs comes with exceptional domain knowledge in credit underwriting and risk managementand we see immense value in TERA Finlabs core lending infrastructure capabilities. Together, we are looking forward to addressing newer working capital issues faced by MSMEs.”

TERA will bring its entire technology stack, risk management capabilities, and onboarding solutions to create and enable a credit line for Razorpay’s merchantnetwork. Razorpay Capital along with TERA Finlab expects to service the credit needs of over 10,000 businesses in India by the next year.

This marks Razorpay’s third acquisition and comes following its foray into the B2B SME lending space with the launch of Razorpay Capital in 2019, the statement further said.

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MSMEs stare at uncertainty over high debt & delayed payments, BFSI News, ET BFSI

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Pune: Operators of micro, small and medium enterprises (MSMEs) in Maharashtra have sought concrete and comprehensive steps from the Union government to streamline the sector, which was facing a multitude of factors like high levels of indebtedness threatening to sink large parts of it.

The operators of MSMEs, who are the largest industrial employers in Maharashtra, said they were facing other factors like delayed payments and high raw material prices over the past year. The prices for steel, for example, have risen by up to 50% over the past year, with some even accusing steel manufacturers of cartelization.

Recent data released by the Centre showed that Maharashtra, the most industrial state in the country, also had the dubious distinction of being the state with the most number of cases related to delayed payments to MSMEs. These payments are supposed to be released after orders being serviced within 45 days, according to Union government regulations.

“We do not get payments on time anyway, and now because of the pandemic, those payments have been delayed more. Thus, we do not have funds to execute new orders, or even invest in clearing older orders,” said a MSME operator based out of Chinchwad.

Also complicating matters is the fact that only around one of six MSMEs across the country (and a similar level in the state) are unregistered with the government, which makes them unable to access credit with banks, or avail of other government incentive or bailout schemes. The latest signing-up drive by the Union MSME ministry generated a tepid response.

“The registration drive for MSMEs should be carried out like Aadhaar. Only then will more MSMEs register with the government,” said an industry observer based in Pune.



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SIDBI’s net profit up 3.6% in FY2021, BFSI News, ET BFSI

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The operating profit (before provision) of SIDBI has recorded a Year-on-Year (YoY) growth of 8.0% in FY21 over FY20 to Rs. 4,063 crore. The net profit witnessed a growth of 3.6% to Rs. 2,398 crore in FY21, from Rs. 2,315 crore in FY20. Net Interest Income (NII) grew by 11.5% to Rs. 3,678 crore in FY21, from Rs. 3,299 crore in FY20. Total advances marginally declined by 5.6% (YoY) to Rs. 1,56,233 crore as of March 31, 2021, from Rs. 165,422 crore as of March 31, 2020. Earnings Per Share improved to Rs. 45.09 in FY 21 from Rs. 43.51 in FY 20

Sivasubramanian Ramann, Chairman and Managing Director, SIDBI, said, “SIDBI has been responsive to the COVID-19 challenges faced by the MSME sector. Besides channelizing the Government of India / Reserve Bank of India (RBI) support to partner lending institutions, SIDBI has launched several schemes like SAFE, SAFEPLUS, AROG, and TWARIT to directly enable MSMEs to revive and thrive. To respond to the emerging needs of the MSME sector, SIDBI continued with its developmental engagements including inter alia powering national missions through digital portals, setting up project management units in 11 states for strengthening the ecosystem, supporting 1700 Women Homepreneurs in 7 states, setting up 100 Swavalamban Connect Kendras to kindle the aspirations of youth / displaced population, as also setting up of Swavalamban Crisis Responsive Fund for MSMEs. I can assure you that besides growing its topline and bottomline, SIDBI shall rise to the occasion for implementing national priorities and continue to contribute to an inclusive AtmaNirbhar Bharat.”



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External benchmarks: 28.5% rise in outstanding loans share

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The share of outstanding loans linked to external benchmarks increased from as low as 2.4 per cent during September 2019 to 28.5 per cent during March 2021, contributing to significant improvement in monetary policy transmission on the back of persisting surplus liquidity conditions, according to an article in the Reserve Bank of India’s monthly bulletin.

Notably, the outstanding loans (linked to both fixed and floating interest rates) in personal and micro, small and medium enterprise (MSME) segments accounted for 35 per cent of the outstanding loans as at end-March 2021, the article “Monetary Policy Transmission in India: Recent Developments” said.

Quarterly periodicity in re-setting interest rates for outstanding loans linked to external benchmark as against annual for MCLR (marginal cost of funds based lending rate) linked loans has contributed to the improvement in pass-through to lending rates on outstanding loans, opined RBI officials Avnish Kumar and Priyanka Sachdeva.

The article said monetary policy transmission is a process through which changes in the Central bank’s policy rate are transmitted to the real economy in pursuit of its ultimate objectives of price stability and growth.

External benchmark

RBI mandated all scheduled commercial banks (excluding regional rural banks) to link all new floating rate personal/ retail loans and floating rate loans to micro and small enterprises (MSEs) to an external benchmark with effect from October 1, 2019. This was extended to medium enterprises, effective April 1, 2020.

The external benchmark could be the policy repo rate or 3-month T-bill rate or 6-month T-bill rate or any other benchmark market interest rate published by the Financial Benchmarks India Private Ltd (FBIL).

Internal benchmark for pricing of loans

The authors emphasised that legacy of internal benchmark linked loans (Benchmark Prime Lending Rate, base rate and MCLR) – which together comprised 71.5 per cent of outstanding floating rate rupee loans as at March-end 2021 – impeded transmission. The share of loans linked to MCLR stood at 62.9 per cent as of March 2021.

“The opacity in interest rate setting processes under internal benchmark regime hinders transmission to lending rates, although the EBLR regime is indirectly also leading to moderate improvement in transmission to MCLR based loan portfolio,” the authors said.

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SBM Bank India & Drip Capital partner to empower MSME Exporters, BFSI News, ET BFSI

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Drip Capital, a fintech provider of cross-border trade finance has tied up with SBM Bank India to offer trade financing solutions – customized for small and medium-sized exporters in India. Owing to this partnership, MSME exporters will be able to avail collateral-free working capital at competitive rates. In the past, Drip Capital has partnered with several local and international banks to offer its financing solutions to SMEs in developing markets like India and Mexico as well as the US. Since its inception in 2016, the company has worked with over 1,500 sellers and buyers spread across 80+ countries. Recently, it crossed over US$ 1Bn in cross-border transactions.

Pushkar Mukewar, Co-Founder and CEO, Drip Capital, said, “By partnering with SBM Bank India, we aim to provide collateral-free working capital to MSME exporters through our invoice discounting facility. This association is an example of how fintech companies are eager to partner with banks and other financial institutions to grow collectively by using technology to its very core.”

Neeraj Sinha, Head – Retail and Consumer Banking, SBM Bank India, said, “The Indian MSME sector is one of the largest exporters in the country. With India being rapidly ascending onto the map of the global supply chain, the MSME sector is set to play a major role in the coming years. It is therefore critical to design and delivers #smartbanking solutions to this segment that offer accessibility, affordability, and adaptive to the ever-changing demands. Towards this, it is our pleasure to partner with Drip Capital. We are sure, together, our solutions will help the Indian MSMEs become more competitive and resourceful.”



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