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Last updated: 23 Sep, 2019  

Rupee.9.Thmb.jpg Supporting SMEs: The evolved approach NBFCs adopt to underwrite SME loans

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Bajaj Finance Spokesperson | 23 Sep, 2019

There's no questioning the fact that SMEs are integral to the fabric of the Indian economy. With over 50 million SMEs employing roughly 10 crore professionals, SMEs have been and continue to be the segment that's leading from the front. Despite SMEs branching out to metros, semi-urban and rural pockets of India, there’s scope for advancement within the sector. Currently, a lack of finance is the primary hurdle, one that has interfered with infrastructure expansion, automation, digitisation, innovation and skill development.

NBFCs have recognised this gap and become more than willing to disburse small-ticket loans. As per data by the RBI pertaining to 2018, NBFC loans and advances amounted to a whopping Rs.19,842 billion. Moreover, as per a 2017 report by MAPE Advisory Group, 5% of SME lending requirements that aren’t fulfilled will equate to an opportunity of $15 billion by 2020.

By evolving the underwriting process that’s at the core of loan disbursal, NBFCs like have made it easier still for SMEs to access the finance they need to power their performance.

Redefining underwriting for SME loans

Lending to SMEs has always been approached with a certain degree of caution owing to defaults with loan recovery and non-performing assets. To allow MSMEs to continue borrowing finance while curtailing risk, NBFCs have moved on to a more evolved underwriting process.

With artificial intelligence (AI), machine learning (ML), and data analysis forming the basis of credit assessment, NBFCs are being able to offer loans that keep the asset-liability cycle in check.

Understanding the all-new underwriting process

Lack of a formal credit history has always been a deterrent for SMEs, but today they can side-step this problem as NBFCs have created their own credit assessment processes instead. Using information from a number of sources in combination with AI and ML, NBFCs are able to make a fair risk assessment to issue finance.

In recent years, savvy NBFCs with an nuanced understanding of fintech have made use of information gathered via bank statements, GST returns, point of sales data, card sales, PAN/TIN information, as well as websites such as Facebook, LinkedIn and platforms such as Truecaller and Just Dial to understand SME applicants. By relying on an intelligent algorithm that trawls data from thousands of touch points, NBFCs are not only able to make a smart assessment, but are also able to offer financing instantly.

Bajaj Finserv's SME Loan leads the way
Bajaj Finserv's Loan for SMEs is the perfect example of how an NBFC is using the wealth of information available to offer financing in a fraction of the time that a traditional loan would take. By giving SMEs up to Rs.30 lakh on a collateral-free basis, it allows enterprises to address big and small needs that are key to unlocking a new phase of growth. From buying inventory to scaling machinery and infrastructure, approval for Bajaj Finserv’s SME financing is available within 24 hours.

What helps seal the deal is the NBFC’s attention to the little details. By extending a tenor of 12 to 60 months, for instance, it not only offers quick financing, but also makes repayment convenient. In a similar vein, via its unique Flexi Loan facility, Bajaj Finserv disburses funds from the total sanction in parts, as and when you require financing. Moreover, it levies interest only on the amount used and not the entire sanction, while also allowing you to pay interest-only EMIs through the tenor. By helping borrowers pay as per their usage, Bajaj Finserv simplifies cashflow management as well.

The cherry on the proverbial cake is Bajaj Finserv's pre-approved offer that you, an SME applicant, can access. By entering 2 details in under a minute, you can find customised financing solutions that address your firm's needs effortlessly. This facility is just another way in which a fresh approach to underwriting has improved access to finance for SMEs across the organised and unorganised sector within the country.

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