Non-Banking Financial Companies (NBFCs) have emerged as a vital source of credit, particularly for Micro, Small and Medium-sized Enterprises (MSMEs). These institutions bridge the gap for businesses often overlooked by traditional banks, fueling their growth and propelling economic progress.
On the contrary, leadership plays a vital role in resolving the complexities in this active field. Steering through all the challenges and opportunities feels like a knife in the butter with good leadership.
Born from a vision to “Solve the Unsolved,” UGRO Capital is a DataTech NBFC dedicated to lending and servicing all the needs of MSMEs.
Amit Mande, the Chief Revenue Officer at UGRO Capital, stands out as a true leader. With over 20 years of experience in finance, he embodies the qualities that define a visionary leader who does not shy away from adversity but embraces them as opportunities for growth and learning. Throughout his career, Amit has demonstrated his ability to lead and excel in the finance industry. Starting from his early days at global financial giants, he gained invaluable knowledge and expertise that laid the foundation for his future success.
Amit took on leadership roles at renowned organizations, further honing his skills as he progressed. His ability to handle adversity is a testament to his leadership qualities. This resilience enables him to inspire and motivate his team members during difficult times, ensuring they remain focused and driven towards achieving their goals.
At The Enterprise World Magazine, we are dedicated to exploring innovative solutions that shape the future of business. Today, we have the pleasure of speaking with Amit Mande about his vision for UGRO Capital and how its platform empowers mid-sized enterprises to thrive.
1. Can you share the story behind the founding of UGRO Capital and what inspired you to focus on solving the small business credit gap in India?
The company was started 6 years ago to ‘Solve the Unsolved’ – the burgeoning credit gap of MSMEs in India, thus revolutionizing the MSME lending ecosystem. Today, we are committed to the path like never before, to acquire 1 million customers and capture a 1% market share of the larger MSME lending market over the next three years.
UGRO Capital was established in 2018 to seize the fresh opportunities arising from digitization, encompassing UPI and GST. This digital transformation paved the way for innovative lending methods, moving beyond traditional dependencies on collaterals or financials.
We pioneered cashflow-based lending with a starting capital base of ~INR1000 crores and strategic data analytics investments. Our commitment to understanding and meeting the genuine needs of MSMEs has driven our growth. Today, with a diverse portfolio spanning secured and unsecured lending, equipment finance, supply chain finance, green finance, and micro-enterprises, we operate over 190 branches nationwide.
Our vision is to become the largest small-business financing institution in India, driven by data and technology.
2. How is UGRO Capital solving the Micro MSME problem in India?
Micro-entrepreneurs are the backbone of India’s economy, and we’re here to empower them. We offer streamlined micro-loans with minimal paperwork designed for their needs. Our expertise goes beyond micro-enterprises, covering 9 key sectors and over 180 sub-sectors. This deep understanding allows us to tailor financial solutions for every MSME.
We are committed to local focus with a presence in over 200 cities. Dedicated branches cater to small businesses in Rajasthan, Tamil Nadu, Gujarat, Karnataka, and Telangana, etc. understanding their cash flow and extending credit accordingly. Our expansion plans reach further into Uttar Pradesh, Madhya Pradesh, and Andhra Pradesh, aiming to reach 400 branches by the end of next year.
We offer a comprehensive suite of products to meet MSME needs, from secured and unsecured business loans to supply chain and machinery finance. Loan terms are flexible, ranging from 7 days to 15 years, and amounts range from Rs. 50,000 to Rs. 5 crore. Our distribution network ensures accessibility for MSMEs of all sizes and locations.
3. How does UGRO Capital leverage data technology to address the challenges in MSMEs in accessing credit, and what sets your Data Tech Lending platform apart from traditional lending models?
Our investment in data analytics and technology positions our products to leverage the digitized MSME sector. We have embraced a cashflow-based lending approach, utilizing advanced technology to assess cash flows accurately. Our commitment goes beyond traditional methods, delving into the intricacies of customers’ profiles to understand income and cashflows not adequately reflected in conventional records.
Setting us apart – our immersive process integrates our unique proprietary underwriting model, GRO SCORE 3.0, which assesses customers on their banking, bureau, and GST behaviors to extend credit to the last mile. Our digital stack is vital in making credit access and servicing convenient for customers. Our entire onboarding process, whether direct or assisted, is fully digital. Moreover, our sectoral focus has led to the development of tailored risk models for specific sectors and subsectors, allowing us to extend credit judiciously and accurately price it.
4. Could you elaborate on the various loan programs offered by UGRO Capital and how they cater to the diverse needs of MSMEs, including secured and unsecured loans?
Since its inception, UGRO Capital has been building a suite of products in the MSME lending space to cater to different businesses with customized offerings. We recognized that the one-size-fits-all approach would not work for last-mile MSMEs. Our approach is to utilize data from multiple ecosystems while providing credit through dynamic technology channels. Through thorough analysis, we crafted loan products with flexible tenures, interest rates, and repayment schedules, catering to diverse needs. While doing this, we embraced data analytics to assess creditworthiness, moving away from traditional collateral requirements and paving the way for inclusive finance.
The company consistently aims to address the changing needs of MSMEs. We offer GRO X, an on-tap financing solution that signifies a significant leap in empowering MSMEs. This closed-loop retailer financing solution provides instant credit to the last mile, granting small merchants the ‘Non-Stop Business karne ki Azaadi’ they need to operate at peak efficiency. The GRO X App, a digital solution tailored for small merchants, offers a seamless experience with customized solutions, flexible tenure, repayment options, and a pay-as-you-go model.
Our retailer financing initiative is a prime example of leveraging alternate data designed to support the final stretch of supply chains by digitally onboarding and servicing retailers. Utilizing alternate data and bank transaction histories, we extend financing to retailers for their supply chain or term loan requirements.
In our commitment to sustainable operations, our Green Finance solutions are intended to aid MSMEs in transitioning toward environment-friendly practices. We extend financing options for initiatives such as rooftop solar installations, green logistics, and energy-efficient solutions. Collaborating with a robust network of solar panel manufacturers and EPC companies ensures that our green financing solutions reach the last mile, enabling MSMEs to harness the benefits of solar energy. Our partnerships extend to manufacturers of L3 and L5 logistics Electric Vehicles, aligning with our goal of promoting green ecosystems in logistics operations. Engaging with partners involved in various sustainable practices, such as battery recyclables, solar charging stations, and overall energy-efficient solutions, reinforces our devotion to environmentally responsible financing.
5. In what ways has UGRO Capital collaborated with large OEMs, banks, and fintechs to create an end-to-end solution for MSMEs, and how has this ecosystem evolved?
We operate within two distinct ecosystems: equipment finance and supply chain. We partner with over 50 OEMs, facilitating seamless financing for their machinery. Working closely with industry leaders, we expedite customer requests, enabling swift access to funds. This collaborative approach benefits manufacturers by improving cash flow and reducing credit periods.
We engage directly with brands to extend financing to their networks, including retailers, on the supply chain front. By integrating digital solutions and leveraging WhatsApp for customer interactions, we ensure a smooth and transparent experience. UGRO Capital has collaborated with around 60 lenders, 40+ fintechs, and over 500 GRO partners to provide data-backed customized finance solutions to over 480,000 MSMEs across India.
6. Tell us about the technology architecture supporting UGRO Capital. How do platforms like GRO Plus, GRO Chain, and GRO Xstream contribute to the customized sourcing and co-lending initiatives?
UGRO’s expertise in Data Analytics and robust Technology architecture empowers the creation of tailored sourcing platforms for various channels. The GRO Plus module offers an innovative intermediary sourcing approach akin to the efficiency of ride-sharing services. GRO Chain facilitates supply chain financing, streamlining invoice approval and processing from end to end through automation. The GRO Xstream platform enables co-lending, integrating seamlessly with fintechs and liability providers. Furthermore, the GRO X application delivers embedded financing options directly to MSMEs, enhancing accessibility and efficiency in accessing financial services. These platforms signify UGRO’s pledge to utilize technology for inclusive and effective financial solutions.
7. Can you share some success stories or examples of how UGRO Capital’s Co-Lending model has positively impacted small businesses in India?
Traditionally, liquidity has flowed via NBFCs to the last-mile MSMEs through the on-lending model. However, given certain instances and disruptions because of entity risks that the markets have seen, co-lending is a far better model. This liquidity can now be employed in the final MSME through co-lending and co-origination between banks and NBFCs. Co-lending as a model structurally works on the lending policy and a bi-customer evaluation for the flow of credit, ensuring the flow of liquidity to the last mile.
Capital lending is a solid liability model for UGRO where the benefits of differential interests can be passed on to the customer, making it more affordable. Given UGRO works in the MSME segment and all customers acquired are under the priority sector, this also aligns with the bank’s focus on the MSME priority sector.
Indeed, co-lending arrangements between such institutions emerge as a strategic solution, aiding smaller MSMEs and boosting NBFC liquidity. This collaborative approach ensures credit accessibility while reinforcing financial stability. We take pride in being India’s largest Co-lender in the MSME segment, which stands as one of the pillars of our success, with partnerships extending to various private and public banks and NBFCs. As of September 2024, 44% of our total AUM comprises off-book AUM, a testament to the efficiency of our co-lending partnerships.
8. In the rapidly evolving fintech sector, how does UGRO Capital stay ahead of the curve in terms of technological innovation and industry trends?
Historically, MSMEs have faced challenges with underdeveloped banking habits and incomplete financial disclosures, leading to collateral-based lending. However, the emergence of ecosystems like India Stack, GST, Account Aggregators, OCEN, and other alternate data sources is transforming this scenario by providing a wealth of data. In response to this evolving financial sector and changing customer demands, UGRO is strategically adapting its business model to stay aligned with customer expectations.
Our investment in data analytics and technology positions our products to leverage the digitized MSME terrain. We have embraced a cashflow-based lending approach, utilizing advanced technology to assess cash flows accurately. Our commitment goes beyond traditional methods, delving into the intricacies of customers’ profiles to understand income and cashflows not adequately reflected in conventional records.
Our immersive process integrates assessed cashflows into our proprietary risk model, GRO SCORE, ensuring swift customer assessments and approvals within an hour. Moreover, our sectoral focus has led to the development of tailored risk models for specific sectors and subsectors, allowing us to extend credit judiciously and accurately price it.
9. What guiding principles or philosophies do you follow in steering UGRO Capital towards achieving its mission, and what advice would you offer to aspiring entrepreneurs in fintech?
As a company, UGRO Capital prioritizes a customer-centric approach, ensuring that our decisions align with the needs of MSMEs. To succeed in the evolving fintech industry, it is crucial to prioritize innovation and adaptability. Continuous learning and improvement are ingrained in our culture to stay ahead of industry trends.
“In other words, the more you seek to know your customer and their needs, the better the reception of the company in the market.”
