@Vineetjain111 @Ysr Your points are valid if you compare Ugro lending to MSME vs banks lending directly to MSME.
The point I am comparing here is bank lending to UGRO vs bank lending to MSME borrower via colending. As a bank I have two choice, I can lend X amount to UGRO at 10.5% or I can lend the same amount via co-lending and get 10.5%. Interest rate is derivative of the risk of the underlying asset. Probablity of UGRO defaulting is much lower than a MSME borrower.
Banks take hell of a credit risk while doing a co-lending transaction. As a co-lending partner, bank has to bear 100% credit risk of the 80% portion of the loan
Credit risk is the most important factor that defines the interest rate of the loan. Why would a banks settles with same RoI when credit risk goes up and service costs of both type(again, to Ugro vs to MSME via colending) is the same and are very small compared to loan size.
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