Narrow Business Focus, Wide Technology Adoption

Reported by: |Updated: April 8, 2021

U GRO Capital’s flagship platform is capable of onboarding of MSME customers completely digitally, with decision in 60 minutes:

U GRO Capital has chosen not to lend to anyone and everyone. Unlike most NBFC lenders, it has shortlisted 8 sectors after an 18-month process involving extensive study of macro and micro economic parameters carried out in conjunction with market experts like CRISIL. The 8 sectors are healthcare, education, chemicals, food processing / FMCG, hospitality, electrical equipment and components, auto components and light engineering.

Anuj Pandey, COO of the company, says the company believes that the problem of small businesses can be solved by building deep expertise around core sectors of SMEs in India coupled with a data centric, technology-enabled approach.

BFSI companies are using technology to onboard individual customers faster. Anuj Pandey maintains that the company’s vision is to ‘solve the unsolved’ credit gap issues faced by the Indian MSMEs through smart use of data science and technology. “We strive to build a strong SME financing platform based on sectoral understanding supplemented by a fully integrated technology and analytics platform,” he adds.

GRO+ PLATFORM, 25 APIs

It is as part of this vision that the company has created its flagship Gro+ platform, which is capable of onboarding MSME customers completely digitally and give an in-principle decision within 60 minutes. Explains Anuj Pandey: “It is integrated with more than 25 APIs, has an Optical Character Recognition (OCR) functionality and a completely automated rule engine called Gro Protect. This includes application of an award-winning sector specific scorecard GRO Score and a completely in-house developed machine-learning based banking segmentation module, which reads transaction level data from the borrower’s bank statement and predicts future probability of missed payments. The model creates thousands of features related to inflow and outflow of cash in the borrower’s accounts, frequency and magnitude of transactions and relationship with counterparties – and predicts an adverse event in the near term.”

The in-principle approval rate of the company is about 70%. Anuj Pandey says the company makes use of analytics, data-based decisions and API based information collection of prospect customers to pre-empt default. “We are forewarned even before disbursal. Additionally, we make ongoing cash flow assessments for credit risk. We have partnered with collection platforms with real time receipt and credit facility and integrated with a leading payment gateway.”

PROGRESS DURING COVID

During covid times, U GRO Capital effectively integrated video KYC, video personal discussion and digitally signed agreement modules to augment its existing digital onboarding journey.

In the last 3 months, the company has launched 2 new product programs – Sanjeevani & Saathi – on its Gro+ platform. This was driven by its intent to utilize the operationally passive period of lockdown for significant strategic improvements. Says Pandey: “Through these initiatives, we leveraged our deep digital architecture, which is empowered by algorithm-driven predictive risk tools. Through our platform, we ensured that the entire communication and verification process runs through our video solutions.”

SANJEEVANI WIDENS REACH

Sanjeevani is an end-to-end digital lending program to boost the capital starved MSME sector in India, reeling from the aftermath of covid. The program offers an in-built, upfront, moratorium up to 3 months to aid businesses whose working capital cycles were disrupted either by supply chain breakages, labour issues or adverse cash flows during the covid induced national lockdown. Pandey says the program was built on a deep digital architecture. It is an industry-first program to accelerate instant loans, (both secured and unsecured), up to Rs30 million so that businesses could be re-started and the economy could recover from a three-month hiatus. “It widened our geographical reach to source up to 150 kms from our respective branches,” mentions Pandey.

Features of ‘Sanjeevani’ are many. Range of amount is Rs 1-2.5 million (unsecured) and Rs 5 -30 million (secured) and duration is 3-36 months (unsecured) & 7-10 years (secured). We have best TAT in the industry,” says Pandey.

SAATHI TAPS MICRO BUSINESS

‘Saathi’ tap into the micro businesses. Using advanced data analytics, the company built an algorithm to derive customer eligibility by gathering and synthesizing alternate income and cash flow sources. Additionally, the base of acceptable collateral for secured loans has been widened to enable businesses to unlock their lending potential. Says Pandey: “This secured loan program targets small retail businesses like kirana stores or chemists, and small manufacturing units like micro and small-scale mills, lending against their non-traditional collaterals.”

In the case of Saathi, while range of amount is Rs1.5 million to Rs7.5 million (secured), duration of the loan is 5-10 years and TAT is the best in the industry.

From taking photographs of factories to geo locations, customer coordinates, survey inputs, and the related verification, all procedures can be completed through this platform. This accelerated the entire process of granting instant loans for the MSME/ SME customers. “The entire customer journey, from filling the application form, sharing documents and getting disbursal of the loan can be completed from the workplace within 3-5 business days depending on the availability of the relevant documents with the applicant. This was a significant improvement in the segment when compared to weeks taken earlier for disbursals,” says Pandey.

CUSTOMIZED ELIGIBILITY

U GRO Capital has specially created algorithms to work out the impact of covid on cash flows of customers and have accordingly customized the eligibility criterion. Says Pandey: “Our credit evaluation model has rendered the documentation simpler, as the underlying processes can be carried out by only considering banking and GST statements, collected digitally. A combined impact of the above is reflected in our enhanced reach as we were able to cover a wide variety of entities across the small business segment. This has helped us to surpass our monthly disbursals of pre-covid levels.”

APPS, PARTNERS, ALLIANCES

U GRO Capital’s onboarding modules on the tech platform has been customized as per the needs of the target segment. Pandey cites deployment of a number of apps for the purpose: “Gro+ app caters to the traditional intermediary led businesses across our various branches in the country and has given access and control in the hands of our GRO partners to participate in the onboarding process digitally. For our supply chain business vertical, we have the ‘GRO Chain’ app which has been developed specifically considering nuances and special needs of that business. ‘GRO Xstream’ is our solution for ‘partnerships & alliances’ vertical and has helped form digital alliances across banks, NBFCs, aggregators and fintech marketplaces for co-lending and securitization.”

DATA LAKE ARCHITECTURE

These ‘plug and play’ onboarding modules across distribution verticals have been made possible because of the underlying tech design and a zero data loss data lake architecture. It has tied up with some of the industry’s best technology partners – Decimal, Nucleus, SAS, Karza, Perfios – in each domain which keep pushing the benchmarks higher and higher.

The company’s experience is that technology works best when the processes are made simpler and standardized. Pandey says: “We have been conscious about this from the very start. Our investments in 100% cloud infrastructure and data led ecosystem are paying us good dividends now. The technology architecture design should also anticipate future needs otherwise there is a fear of it becoming obsolete very soon.”

CUSTOMER ACQUISITION ON

U GRO Capital’s constant improvisations and highly efficient technology architecture have helped it bounce back strongly. Pandey elaborates “This is reflected from our customer acquisition figures, as we onboarded 943 small businesses cumulatively from Q1 FY 2021 to Q3 FY 2021, as compared to 1198 customers in FY 2020 in spite of new disbursals being impacted during the pandemic induced lockdown during Q1 2021 and with a critical quarter still to come.”

SECTORS, STATES

The 3 sectors that accounted for the highest number of customers for U GRO Capital are light engineering, food processing and electrical equipment. When it comes to geography, the highest count of customers onboarded belong to the states of Gujarat, Karnataka, Maharashtra, Delhi and Telangana.

ROBUST DISTRIBUTION

As of Q2 FY 2021, the GRO partner network comprises 518 partners, which is a 32% rise as compared to its size in Q1 FY 2021. The company has onboarded 24 ecosystem partners and 32 corporate partners as of Q2 FY 2021. A cohesive distribution channel coupled with a highly motivated team of 194 members across branches are instrumental for the smooth functioning across geographies, says Pandey.

While 85% of the book constitutes organic booking (secured, unsecured, machinery loans, supply chain financing), 5% of the book is from corporate (onward) and 8% from direct assignment, says Pandey.

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