Arka Fincap and Central Bank of India Enter Co-Lending Partnership for MSME Loans

By siliconindia  |  Wednesday, July 17, 2024

Arka Fincap and Central Bank of India Enter Co-Lending Partnership for MSME Loans
Arka Fincap, the NBFC vertical of Kirloskar Group, informed that it had entered into a co-lending agreement with Central Bank of India for extending loans to Micro, Small, and Medium Enterprises. This strategic partnership will help offer loans to MSMEs at competitive rates and increase access to more financial services within India.
In the very co-lending arrangement, Arka Fincap will originate and process loan proposals based on jointly formulated credit parameters and eligibility criteria. This has been done with the twin aims of fast-tracking the loan application process and grabbing a better market share to reach out to more MSMEs with much-needed financial support.
"This partnership is in line with our strategy of growing our retail lending book," said Amit Kumar Gupta, Group Chief Financial Officer at Arka Fincap. "It places us really well against new opportunities of growth and to adapt to the changing financial landscape, transforming the story of India's MSME sector".
It has signed an agreement with the Central Bank of India under which the latter will take 80 % of the loans on its books while Arka Fincap will handle the accounts across the loan cycle. The co-lending model is likely to bridge the credit gap for MSMEs, thus giving them the money needed to expand operations in the above-mentioned segment.
He said, "Central Bank of India's co-lending tie-up with Arka Fincap has been a very big step toward our goals: to grow our portfolio and position ourselves as the first-choice NBFC in the business loan segment for the MSME sector. Competitive rates would benefit MSMEs availing of the loan".
The four major business segments that Arka Fincap deals with are MSME & SME lending, corporate lending, real estate, and urban infrastructure financing and syndication. On March 31, 2024, its AUM stood at Rs 5,200 crore, with its retail AUM comprising 50% of that amount. Arka aims to grow its book to Rs 7,500 crores by FY25 and has set the target of Rs 5,000 crores from MSME lending, while intending that MSME loans need to make up 75 percent of its total portfolio.
In its efforts to increase market share, Arka Fincap plans to expand its branch network from 31 to 60 branches across 13 states by the end of the fiscal year. This expansion is part of its broader strategy to enhance its presence and better serve the MSME sector.

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