This startup is building infrastructure to automate and ease the process of giving out small biz loans
Photo by Lewis J Goetz on Unsplash
U GROCapital is looking to disburse loans worth ₹2,000 crore by March 2023 with their new alliance with Yubi.
- Separately, the company has an off-book asset under management (AUM) of ₹3,600 crore that they plan to double in the same time frame.
- The lender believes that the alliance would make their partnership with banks much simpler.
AdvertisementLending company U GRO Capital on Wednesday announced a strategic alliance with debt marketplace Yubi (formerly known as CredAvenue) in an attempt to give out small business loans worth ₹2,000 crore to MSMEs by the end of this fiscal year. Separately, the company has an off-book asset under management (AUM) of ₹3,600 crore that they plan to double in the same time frame.
The strategic alliance comes with two partnership deals to achieve this target set for the deal. First, between the companies’ co-lending platforms Yubi-Co.Lend and GRO-Xstream. Second, between Yubi's supply chain financing vertical Yubi Flow and U GRO’s offer for end retailers GRO-Line.
Shachindra Nath, vice chairperson and managing director of U GRO Capital, in a conversation with Business Insider India noted that Yubi is building a market infrastructure, where they are integrating multiple banks and lenders together to make the co-lending process smoother.
He noted that this integration would allow lenders like U GRO to directly transfer all major data of the customer to the co-lending banks, digitizing the entire process.
This partnership would actually allow the lending company to enhance their existing co-lending partnership with banks, he added.
“Today if I am doing ₹50 crore co-lending with a particular bank. Increasing from ₹50 crore to ₹100 crore is very difficult because banks have to put more people in and we have to put more people in between… If your bank is taking two hours or three hours to process a particular loan case, it will [now] only take five minutes,” Nath added.
The Yubi partnership can help U GRO enhance its co-lending partnerships
Notably, a co-lending arrangement usually involves two entities — a non-banking finance company (NBFC) and a bank. The NBFC is the front for underwriting a loan, but a majority of that loan is actually facilitated by large financial institutions like a traditional bank.
In this case, U GRO being an NBFC, onboards small business owners as borrowers based on several metrics. The company itself only finances 20% of the loan amount, while the rest is financed by traditional banks like State Bank of India and Yes Bank. Any profit, interest or loss is incurred by these two entities in the 20:80 ratio.
“It is only 20% of the loan on my (U GRO’s) book. The balance is gone to SBI or any other partner bank, but U GRO would service that loan for the next five-six years. Customer is unimpacted,” Nath explained, emphasizing that this model is globally known as Lending-as-a-Service (LaaS).
AdvertisementNath noted that they are underwriting loans through their tech platform that majorly runs on data points with less human intervention. The banks, on the other hand, access the same loan manually which requires a lot of manpower and time. Therefore, the integration with a tech platform like Yubi would enable their banks to access these loans much faster with the same capacity.
“We, at Yubi, are working towards accelerating financial inclusion in the country through a technology-driven credit infrastructure that powers discovery, execution and fulfillment. We are elated to partner with U GRO Capital with a shared vision to bridge the
The worst of the rupee's decline might be over as market expects US Fed to dial down pace of hikes
Markets on a wait and watch mode as they await cues from RBI
As new cars get pricier, pre-owned BMWs, Audis and Porsches get more attractive
Popular on BI
- Elon Musk said Twitter will start showing users how many people have seen their tweets, and got Jack Dorsey's approval
- Elon Musk reportedly told workers at his brain-chip startup to imagine they had bombs strapped to their heads to make them work faster
- A janitor laid off at Twitter's headquarters said one of Elon Musk's team members told him he'd be replaced by robots
- Cyclone Mandous weakens into deep depression after crossing coast in TN
- India abstains on UNSC resolution exempting aid from sanctions, says terror groups in neighbourhood take advantage of carve-outs
- BSF, Pak Rangers exchange fire along international border in Rajasthan
- Indians report unexpected rise in heart attacks, says survey
- WHO concerned over increasing antibiotic resistance in human infections
- Realme10 Pro Plus Mobile
- Gig jobs
- Sula Vineyards IPO
- Whatsapp tips
- International Roaming Plans
- RBI hikes repo rate
- Larget Employers
- Highest Revenue companies
- New Cars in December 2022
- Best Companies for Work
- India's Richest People
- Most Valuable Companies
- Most searched movies
- Adani Enterprises
- Top 10 Colleges in India
- Top 10 Airlines in World