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U Gro Capital Proposes NBFC-MSME Category

Updated: Dec 06, 2023 01:23:29pm

U Gro Capital Proposes NBFC-MSME Category

New Delhi, Dec 6 (KNN) Shachindra Nath, Managing Director of U Gro Capital has pitched for a new category of non-banking financial companies (NBFCs) serving micro, small and medium enterprises (MSME), reported Mint. 

“Just like NBFC-MFI and HFC (housing finance companies), there should be NBFC-MSME,” Nath told Mint exclusively. 

Gauging the impact of the Reserve Bank of India’s (RBI) recent move to increase the risk weight on consumer loans, he said that it will have an impact on NBFCs with the bank borrowing cost increasing. 

“However, it does not impact the NBFCs serving the MFI and housing finance segments. The RBI move is going to increase our borrowing cost from banks,” he added without revealing further details.

The publicly-listed MSME lender on Tuesday partnered with Laghu Udyog Bharati, an organization dedicated to supporting micro-enterprises, to launch awareness programmes to empower MSMEs with knowledge about government schemes and digital credits, reported Mint. 

“A research report shows that when it comes to credit, 28 per cent MSMEs are self-financed; 12% have raised financing through informal channels; while only 10% are financed through formal institutions such as banks and NBFCs. NBFCs share in MSME lending is just 10 per cent,” Om Prakash Gupta, All India general secretary, Laghu Udyog Bharati, said during a press conference. 

“We will organize awareness programmes for MSMEs with U Gro in 100-150 locations across India in next few years. We believe the awareness around credit will be a game-changer for small businesses in India,” said Gupta.

Large NBFCs’ MSME lending exposure is not more than 12-15%, Nath claimed. “We have so far built a loan book of Rs 8,000 crore and served about 90,000 MSMEs. Over the next three years, our aim is to capture 1 per cent market share of the MSME credit that currently stands at about Rs 22 lakh crore. This means we will build a book of Rs 25000 crore and target a base of over 10 lakh MSMEs.”

(KNN Bureau)


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