Godrej Capital to onboard smaller lenders on ‘Nirmaan’ platform, explore co-lending

Godrej Capital is in the final stages of onboarding other smaller financiers onto its MSME ‘Nirmaan’ platform, and may eventually explore co-lending partnerships with these lenders, the company’s MD and CEO Manish Shah said.

“In Nirmaan, we are welcoming smaller financiers. We have not yet started underwriting and accepting loan applications under ₹5 lakh, but that doesn’t mean that the customers are bad. So we’re in the final legs of onboarding smaller, specialised NBFCs that will underwrite those particular loans,” Shah told businessline.

This is a lesson learnt from Godrej Capital’s affordable housing business, where the company lacked expertise, and thus chose to partner with smaller housing finance companies (HFCs). Here, the HFCs source and underwrite the local borrowers, whereas Godrej Capital provides the capital at reasonable terms and rates.

“While the idea is not to make ‘Nirmaan’ an open marketplace, Godrej Capital will pick and choose lenders that have certain specific areas of expertise,” Shah said, adding that similarly on the other side, it may work with the banking partner DBS Bank for MSME loans of over ₹50 crore, which the NBFC currently does not give. On its part, the company will be open to any co-lending arrangements that may arise from these partnerships.

“We’ll see how it evolves. At this point, it is about who will service the needs. For example, if there is a smaller NBFC, we are okay with them lending the whole amount, even if there’s no co-lending. If that turns into a co-lending arrangement, also fine,” Shah said.

Godrej Capital is expected to reach assets under management (AUM) of around ₹12,000 crore by the end of the current financial year, wherein MSME loans will grow faster than housing loans.

“Of this, about ₹5,000 crore will be housing and ₹6,000 crore plus will be MSME,” Shah said, adding that because the company has several offerings in both secured and unsecured loans, it will be able to take larger exposures as the size grows. As of October 2023, the AUM was around ₹8,000 crore, evenly distributed between housing and MSME loans.

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“In the four years thereafter, by FY28, our goal is to hit ₹50,000 crore AUM, of which roughly ₹35,000 crore will be MSME. Within this, somewhere between ₹7,000-10,000 crore will be unsecured and ₹25,000 crore will be secured.”

However, the NBFC is not counting on ‘Nirmaan’ platform to grow its MSME business. The platform instead is aimed at providing value-added services to MSMEs such as employee welfare, legal advice and cyber security and growing the business, without any requirement of obtaining a credit line from Godrej Capital.

“We’re very open in saying let’s first be useful, then we’ll put numbers to it because something like this hasn’t been done before,” Shah said adding that the lender might also look at co-branded credit cards as a credit mechanism at a later stage.

The company received constant feedback from about 200-300 MSMEs during the pilot phase launched in April. While the offerings were fewer at the time of launch, the Nirmaan platform has since partnered with DBS Bank, Visa, Amazon, Onsurity, Zolvit, MSMEx, GeM Tech Paras, Escrowpay, GreytHR, and Serapis Knowledge Solutions, among others to offer varied solutions.

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