While the coronavirus outbreak has brought attention to banks not lending money to small and medium-sized businesses across the country, the new credit guarantee plans, such as the Bank of Baroda’s Pratham Program, are expected to attract more lenders. In collaboration with U GRO Capital, a non-bank financier, the Bank of Baroda has launched the Pratham Programme where MSME Borrowers Can Take loans.
The companies under MSME Registration are the key pillar of any nation’s economic development, and India, with its huge population in need of products and services, is no exception. It is a great challenge to find and protect the right source of funding for MSMEs.
MSME Borrowers Can Take loan up to Rs 2.5 Cr from Bank of Baroda-U GRO
The Bank of Baroda will provide a loan of 1,000 crores to the country’s MSME sector through the Pratham financing platform. This joint venture initiative, 1,000 crores, will enable MSMEs to use their customized loan solutions at a competitive interest rate, which will significantly reduce the turnaround time. The value of the loan goes from 50 lakh to 2.5 crores at an interest rate starting at 8 percent with a maximum tenure of 120 months.
On the celebration of the 114th day of the founding of the Bank of Baroda, the Pratham program was officially launched to disburse loans. The program was initiated under the amended co-lending criteria of the Reserve Bank of India. The importance and faith of the bank in combining sectoral experience and technology to solve the MSME’s unresolved credit requirements has been reaffirmed, according to Shachindra Nath, Managing Director of U GRO Capital.
Bank of Baroda’s MSME loans and advances can be used to meet these enterprises’ fundamental necessities.
- Procurement of plants, land, and building space.
- Acquisition of machinery and equipment includes laboratory equipment, testing equipment, etc.
- Working capital requirements include raw supplies, inventory, finished products, and invoices to buy or discount.
- Additional temporary aid to satisfy the urgent raw material requirements.
- Additional monitoring support for any reason that qualifies.
The Pratham program, while granting funding for the companies falls MSME Registration, requires minimum documentation. The patented Gro-Xstream platform developed by U GRO Capital offers speedier start-up time, including in-principle approval within 1 hour. This program offers finance for a wide range of MSMEs, including the newly included wholesale & retail traders in the priority sector. According to the Reserve Bank of India’s (RBI) new co-lending guidelines, the bank will be responsible for 80% of the loan portfolio, while the NBFC partner will be responsible for the remaining 20%. U GRO is then in charge of originating, underwriting, and disbursing the loan through its platform, transferring 80 percent of the debt to the Bank of Baroda’s balance sheet. The regulator permitted banks and NBFCs to co-authorize lenders to the priority sector in November last year.
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