In a bid to improve credit access for underserved businesses, Godrej Finance Limited (GFL) has entered into a co-lending partnership with Muthoot FinCorp to provide property-backed loans to micro, small and medium enterprises (MSMEs) across India.
The initiative will initially target Tier-2 and Tier-3 cities, offering flexible, tech-enabled loan solutions that meet the growing financial needs of small enterprises, particularly those struggling with traditional bank lending restrictions.
Loan offering designed for real-world MSME needs
Under the partnership, MSMEs will be able to access loans against property (LAP) ranging from ₹10 lakh to ₹75 lakh, with an average ticket size of around ₹15 lakh. These loans will be extended for business expansion, working capital, equipment upgrades, and other commercial needs.
The digital integration between Godrej Finance and Muthoot FinCorp aims to streamline the application and approval process — offering faster turnaround times, real-time updates, and full compliance under the RBI’s co-lending framework.
According to company officials, the partnership expects to disburse ₹250 crore in loans during the current financial year, with plans to expand into gold loans and housing finance in the near future.
Roles and risk-sharing between the partners
In the co-lending structure, Godrej Finance will assume 80% of the credit risk, while Muthoot FinCorp will take on the remaining 20%. While Muthoot FinCorp will manage customer sourcing, underwriting, collections, and servicing, Godrej will oversee regulatory compliance, lending policy, and risk monitoring.
This risk-sharing model is expected to encourage more efficient loan deployment, while ensuring responsible lending practices and portfolio quality.
Bridging the MSME credit gap in underserved regions
Manish Shah, MD & CEO of Godrej Capital, noted that while MSMEs are central to India’s employment and economic output, they continue to face barriers in accessing formal credit. “With this partnership, we aim to solve that problem — offering faster, simpler, and transparent financing options, especially in smaller cities,” he said.
Shaji Varghese, CEO of Muthoot FinCorp, added that their 3,700+ branches and Muthoot FinCorp ONE app provide the last-mile infrastructure needed to reach MSMEs where banks often don’t go.
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The new LAP product is expected to benefit small manufacturers, service providers, and traders operating in semi-urban and rural markets, where credit demand is high but largely unmet.
Digital-first model ensures speed, scale, and compliance
Unlike traditional lending models, the Godrej–Muthoot approach is rooted in digital co-origination, with a unified platform that supports documentation, verification, and approval workflows. This will reduce delays and lower operational costs, allowing for competitive interest rates.
The product is being rolled out across high-potential regions in North, South, and West India, with localisation strategies in place to accommodate regional languages and sector-specific MSME needs.
By combining scale with technology, the two companies aim to reshape the credit landscape for small enterprises — one underserved town at a time.