The Kirloskar Group’s non-banking financial company (NBFC) division, Arka Fincap, introduced a new small ticket loan programme for MSMEs on Monday, secured by real estate. MSMEs would have the opportunity to get credit amounts ranging from Rs 10 lakh to Rs 30 lakh through its Uday small ticket loan product secured by property. The loan product is intended to assist working capital needs for firms in tier II towns and higher.
Currently, MSMEs may apply for up to a Rs 5 crore loans against property with a 15-year term from Arka Fincap. Salem, Vellore, Tirupur, Porur, and Coimbatore are the five Tamil Nadu cities where the service was first introduced by the corporation. Afterwards, the service will be extended throughout the entire nation.
“By providing quick and reliable access to credit, we can help foster the entrepreneurial spirit in smaller cities and towns, driving growth from the grassroots level,” stated Vimal Bhandari, Executive Vice Chairman and CEO of Arka Fincap, during the launch. We are dedicated to fostering financial inclusion and assisting MSMEs, who are the foundation of the Indian economy.
Arka Fincap was founded in 2018 and is a subsidiary of Kirloskar Oil Engines Limited. Its areas of business include syndication, corporate lending, real estate and urban infrastructure finance, and MSME and personal loans.
On June 30, 2024, Arka’s assets under management (AUM) were valued at Rs 5,768 crore. Its CRISIL ratings for long-term borrowings were AA/Stable and for short-term borrowings, A1(+), both of which had a positive outlook. 53 per cent of the overall AUM was made up of retail AUM.
With the government aiming to achieve financial inclusion of businesses in India’s hinterland, the role of NBFCs in facilitating last-mile loans to MSMEs has grown in importance over time. Significantly, Reserve Bank of India data shows that between 2022–2023 and December 2023–2024, NBFC loans to MSMEs exceeded bank loans by a factor of three.
The co-lending framework for priority sector lending, which makes use of banks’ low funding costs and NBFCs’ wider reach, also helped the flow of credit from NBFCs to the MSME sector, according to a study released by the central bank. As of March 2022 and March 2023, banks’ year-over-year (YoY) increase in MSME credit was 12.7 per cent and 12.4 per cent, respectively, while NBFCs’ loan growth to MSMEs was 21.2 per cent and 42.4 per cent.
