Mahindra Group’s non-banking financial company (NBFC), Mahindra & Mahindra Financial Services (Mahindra Finance), has stepped into the co-lending market for the small and medium enterprise (SME) sector through a strategic partnership with digital MSME lender Lendingkart. This collaboration aims to offer accessible and timely credit to SMEs, further diversifying Mahindra Finance’s lending portfolio.
Empowering SMEs Through Collaborative Financing
The co-lending model, also known as co-origination of loans, involves joint credit contribution by lenders, emphasizing risk-sharing and enhancing credit flow to underserved sectors of the economy. According to the Reserve Bank of India (RBI), this model plays a crucial role in providing affordable funds to priority sectors.
Raul Rebello, MD & CEO – Designate of Mahindra Finance, expressed the collective objective of transforming credit decision-making, enhancing accessibility, and fostering financial agility in the SME space through this partnership.
Technological Synergy
Under the 80:20 structure, Lendingkart will leverage its advanced tech platform, Lendingkart 2gthr, for origination, underwriting, disbursals, and collections. This collaboration is poised as a long-term commitment, with the initial agreement spanning three years, aiming to simplify finance for the emerging SME sector in India.
Industry Trends and Collaborative Endeavors
This move by Mahindra Finance aligns with the industry trend of financial institutions partnering with fintech companies and NBFCs to cater to the growing demand for SME lending. Recently, Central Bank of India forged a co-lending partnership with Kisetsu Saison Finance, while Karnataka Bank collaborated with Clix Capital through Yubi Co’s platform for SME lending.
Driving Growth and Inclusion
According to RBI’s report on the performance of the banking sector in December 2023, NBFC loans to MSMEs have shown significant growth compared to bank loans, leveraging the cost-effectiveness and broader reach of NBFCs. In March 2023, services MSMEs accounted for a significant share of NBFC credit to the MSME sector, underlining the importance of such collaborations in driving financial inclusion and economic growth.
Through strategic partnerships like the one between Mahindra Finance and Lendingkart, the financial landscape continues to evolve, enabling SMEs to access vital credit resources efficiently, ultimately contributing to the growth and development of the Indian economy.