Leading lending platform for small and medium businesses, U GRO Capital on Wednesday filed for its unique scorecard based underwriting model at the Indian Patent Office.
U GRO in its statement said, “This model tackles with the unavailability of appropriate MSME database, by utilizing its unique classification technique leveraging the proprietary knowledge base and strength of statistical models. This distinctive underwriting model generates credit score cards customized to suit the peculiarities and nuances of varied business enterprises.”
“The model’s utility is not restricted to businesses, as it enables effective underwriting of individual borrowers, as well, and facilitates trade financing by providing an assessment of downstream and upstream counterparties, and provides a basis for revenue sharing in co-lending arrangements and helps estimate first loss guarantees in the securitization of transactions by providing an assessment of the underlying pool,” it added.
Commenting on the patent application, Mr. Shachindra Nath, Executive Chairman and Managing Director of U GRO Capital stated, “The MSME sector is a significant driver of the Indian economy, yet only 16% of MSMEs in India receive formal credit. A major hindrance to credit access is the limited availability of structured data pertinent to the MSME sector. We believe that MSME financing in India is on the verge of transformation with the combination of GST, Banking Data, and the emergence of digital infrastructure which is underpinning this transformation.”
“U GRO Capital’s scorecard based underwriting model lies at the center of our mission to solve the unsolved credit gap of the SMEs. The underlying methods and system are the convergence of our deep sectoral knowledge base and our analytics capabilities. Our distinctive underwriting model complements the digitalized processes, to provide quick and convenient access of credit to our MSME customers,” Nath added.
“The company has been using the model since inception and has disbursed over of INR 1,700 Cr in the form of secured and unsecured loans. This model is tested to predict superior predictable defaults and improve the GNPA and NNPA levels in comparison to the traditional underwriting model and also improve the bureau defined predictable defaults of different score levels,” the company said.
“The proprietary statistical scorecards for assessment at various stages have been developed in consultations with CRIF and CRISIL market experts. The model can approve credit for business enterprises within minutes, which otherwise would have taken days or weeks,” it added.
Going forward, the company aims to target 250,000 SME and MSMEs and extend loans amounting to Rs. 30,000+ crore in the coming 4 financial years.