Global Alliance for Mass Entrepreneurship (GAME), a mass entrepreneurship enablement platform and Small Industries Development Bank of India (SIDBI), the principal financing body of small enterprises, on Wednesday, announced their joint partnership to launch the NBFC Growth Acceleration Program (NGAP). This programme aims to handhold smaller NBFCs that have at least 60 per cent of their exposure to MSMEs.
Ravi Venkatesan, founder, of GAME explained the rationale behind the launch of the accelerator programme. He said, “Lack of capital and poor access to finance are the most constraining factors in the growth of an MSME. The high cost of service and customer acquisition hinders financial institutions from financing this sector. Small NBFCs, which are the prime source of finance for MSEs, ironically struggle to access credit themselves, as larger NBFCs in India secure nearly 85 per cent of the available bank loans.”
The NBFC accelerator programme will work on capacity building of at least 100 smaller NBFCs with assets under management ranging from ₹75 crore to ₹250 crore who primarily lend to micro and small businesses in tier two and tier three cities, said Ramesh Dharmaji, former Chief General Manager, SIDBI.
The key areas of NGAP’s focus will be helping small NBFCs manage compliances while raising funds from larger NBFCs. The high rate of NPAs is a major concern for NBFCs and the programme will also provide technology support to help NBFCs develop their technology platform for unwriting MSMEs for unsecured lending, thus reducing the cost of customer acquisition.