U GRO Capital, a technology-focused small business lending platform, has entered into a co-lending partnership with the State Bank of India (SBI) to provide credit to micro, small and medium enterprises (MSME).

Through this collaboration, SBI and U GRO aim to disburse up to ₹500 crore by March 2022, U GRO said in a statement.

The agreement has been signed under the alternative option of Reserve Bank of India’s revised co-lending guidelines, which involves post disbursal takeover of the bank’s share in the loan on a back-to-back basis.

“This arrangement will leverage SBI’s prowess on the liability side and U GRO Capital’s origination and distinctive underwriting engine capabilities on the assets side,” the company said, adding it also has co-lending partnerships with Bank of Baroda and IDBI Bank.

U GRO lends to SMEs in eight sectors -- Healthcare, Education, Chemicals, Food Processing / FMCG, Hospitality, Electrical Equipment and Components, Auto Components, Light Engineering.

Dinesh Kumar Khara, Chairman, SBI, said, “Such partnerships align with our commitment to accelerate effective and affordable credit to MSMEs in India and contribute to the country’s financial inclusion imperative towards building an Atmanirbhar Bharat.”

Shachindra Nath, Executive Chairman and Managing Director, U GRO Capital, observed that India’s lending landscape for NBFCs is transitioning. The next decade is expected to be all about collaboration between large banks and niche NBFCs / FinTech wherein ‘Lending as a Service’ would become the prominent force.