Future of Credit Underwriting in MSME lending by NBFCs

Micro, Small, and Medium Enterprises (MSMEs) play a crucial role in the Indian economy, contributing significantly to employment generation and economic growth. Access to timely and adequate credit is essential for them to sustain and expand their operations.

- Manish Odeka

NBFCs like HFS have emerged as crucial players in MSME lending, offering innovative solutions and catering to the unique needs of these enterprises. Post-pandemic, several advancements in technology and data analytics have transformed the credit underwriting process for MSME lending, paving the way for a promising future for both MSMEs & lenders.

I firmly believe that to deliver credit to the vast untapped MSME market, a lender would need a fine runway build upon 2 catalysts – Treasury & Technology – to reach the untapped deeper markets. To serve a heterogeneous market like India, a lender would need capabilities on these 2 Ts to deliver the 4Cs of credit, by being first in queue to select the good credit quality. If the 4Cs are the payload to be delivered, the 2Ts bring the speed & vehicle to deliver this payload timely with better customer experience and delight.

This transformation in retail lending would be led by efficient management of treasury lines, technological advancements, data-driven approaches and alternate credit scoring models. With the right use of technology and data analytics, NBFCs can make their underwriting processes proactive, biased towards good credit, making them agile, quick n accurate, and inclusive to all.

TOWARDS DATA-DRIVEN UNDERWRITING