Co-lending & MSME for a Better Economy
Over 30% of Assets Under Management (AUM) in co-lending are dedicated to financing MSMEs.
This significant figure underscores the growing reliance of MSMEs on collaborative financing models to overcome traditional barriers to credit access. It is noteworthy that MSMEs themselves contribute to approximately 30% of India’s GDP, highlighting their critical role in the national economy.
Analysts, including those from Crisil, project a robust annual growth rate of 35-40% in co-lending. This optimism is fueled by increasing engagement from both Non-Banking Financial Companies (NBFCs) and traditional banks.
The co-lending model, which facilitates partnerships between banks and fintech firms, is particularly beneficial for MSMEs for several reasons:
Enhanced Access to Credit
By combining the extensive customer reach of banks with the innovative credit assessment techniques of fintech companies, co-lending partnerships ensure more MSMEs can secure necessary funding.
Customized Financial Products
These collaborations enable the creation of tailored financial solutions that meet the unique needs of MSMEs, offering more favorable terms such as lower interest rates and flexible repayment schedules.
Efficiency in Loan Processing
The integration of technology in co-lending not only simplifies the application process but also enhances the efficiency of loan disbursals. Fintech’s prowess in digital and automated processes ensures seamless loan approvals.
Advanced Credit Assessment
Utilizing cutting-edge algorithms and data analytics, co-lending models provide a more accurate assessment of creditworthiness, increasing the likelihood of loan approvals for businesses traditionally seen as high-risk.
The strategic adoption of co-lending models is poised to play a pivotal role in scaling the growth and sustainability of the MSME sector, further catalyzing their contribution to the broader economy.
That’s it for now. See you again soon with all the need-to-know fintech updates!
Stay tuned. Stay curious.
Risk Analyst @ Grayquest || IIT(ISM) Dhanbad
5 个月Thats insightful. But does fintech arm has FLDG with Banks or the Credit default risk is split b/w Bank and Fintech. Additionally, which one of them report this loan to Bureau ? Bank or Fintech (if regulated by RBI)