India has around 63 million MSMEs out of which less than 10% have access to formal sources of credit. Further, according to a 2018 IFC report titled ‘Financing India’s MSMEs’, the viable debt gap in the MSME sector is in excess of Rs. 25 trillion which can be addressed by financial institutions in the near term. Under this sector, we work with Originator Partners who lend to MSMEs, and also lend to under-served businesses.

Our Originator Partners operating in this sector adopt varied business models relying on digital sourcing, underwriting and disbursement and platform lenders financing MSME participants in their specialised marketplaces.

The sector offers diverse opportunities to finance a range of underlying livelihoods and industries. Our credit and risk teams form a view on these underlying livelihoods and industries which serves as an input for portfolio selection for portfolio financing of Originator Partners, including developing Retail Lending Partnerships. Credit to end-borrowers may be structured as short-term financing – such as invoice discounting, other supply chain finance or long-term loans, and may be unsecured or secured with security in the form of immoveable property or hypothecation of assets or equipment. Credit underwriting is cash flow based with a range of approaches – varying from personal discussions which are used to estimate credit worthiness of small informal enterprises to financial analysis in case of formal enterprises and also leveraging the rich digital data sets such as trade flows, banking and taxation information available in addition to credit bureau data.

We have been operating in this sector since Fiscal 2014. Our operations under this sector include working with Originator Partners operating in this sector as well as lending to under-served individuals and businesses in need of vehicle finance. Our focus under this sector is on end-borrowers exploring financing for purchase of two-wheelers and commercial vehicles used for commercial transportation of goods or passengers. Originator Partners who finance used commercial vehicles are primarily regional players who predominantly fund light weight commercial vehicles or multi-utility vehicles and commercial passenger cars as well as three wheelers with a lower share of heavy commercial vehicles and commercial passenger vehicles in their portfolios. The loans to such end-borrowers are typically secured by a hypothecation of the vehicle which can be repossessed after following due process in the event of default.

Currently, our operations in this sector include working with Originator Partners operating in this space as well as lending to new to credit and other under-served individuals who may be salaried or self-employed. Financing under this sector includes consumer durable loans, cash or personal loans, salary advance loans as well as the growing segment of buy now pay later financing for products and services delivered through online and offline channels.

The Originator Partners we work with in this sector are largely technology platforms who rely on digital sourcing, underwriting and customer management.

In India, the economically weaker sections and low-income group segments in housing are largely under-served. However, with increasing focus through governmental schemes and subsidies, there has been a renewed thrust on organized supply of affordable housing through incentives for affordable housing projects. We have been operating in this sector since 2013. In this sector, we work with Originator Partners, being housing finance companies, who lend to self-employed or salaried borrower segments for the purchase of residential property (primarily for self-occupation), home improvement and home extension. The loans to such borrower segments are typically secured either by way of deposit of title deeds or a registered mortgage of immoveable property.

Our Company works with Originator Partners that provide post-harvest services and financing in the agricultural and allied segments. This includes players who provide commodity warehousing services and warehouse receipt financing as well as players who finance agricultural and allied activities, often working through aggregators such as farmer produce organisations or dairy cooperatives.