SBI, U GRO Capital to disburse up to Rs 500 crores to MSMEs by March 22 as co-lenders

NBFC company U GRO Capital on Tuesday said State Bank of India (SBI) has partnered with it for a co-lending arrangement to disburse up to Rs 500 crore to micro, small and medium enterprises (MSMEs) by the end of this fiscal.

SBI has onboarded U GRO Capital as its first co-lending partner for its Sanjeevani programme to finance MSMEs, the non-banking financial company (NBFC) said.

Through this collaboration, SBI and U GRO Capital aim to disburse up to Rs 500 crore by March 2022 to provide credit to MSMEs.

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The agreement has been signed in accordance with the alternative option of the Reserve Bank of India's revised co-lending guidelines, which involve post-disbursal takeover of the bank's share in the loan on a back-to-back basis.

"The arrangement will extend credit products under U GRO's Sanjeevani programme, offering loans up to Rs 3 crore, at a competitive rate of interest," U GRO Capital said in a statement.

U GRO had launched 'Sanjeevani' to provide credit to the pandemic-impacted MSME sector in June 2020 and has disbursed over Rs 750 crore, as of October 31, 2021. The NBFC said it has earlier forged co-lending partnerships with Bank of Baroda and IDBI Bank.

Dinesh Khara, chairman of State Bank of India, said this collaboration will further enhance the lender's distribution network as it aims to extend its credit reach to more MSMEs. "Such partnerships align with our commitment to accelerate effective and affordable credit to MSMEs in India and contribute to the country's financial inclusion imperative towards building an Atmanirbhar Bharat."

Shachindra Nath, executive chairman and managing director of U GRO Capital, said India's lending landscape for NBFCs is transitioning. "We believe that the next decade is all about collaboration between large banks and niche NBFCs/ fintech, wherein lending as a service will become the prominent force," he added.

Currently, U GRO Capital has 55 branches across nine states. The company said it aims to expand the branch network to 100 by FY2022. By 2025, U GRO envisions to achieve one per cent market share of outstanding MSME credit in India and serves one million customers.