Business Analysis of Secured MSME Financing:
There has been a huge growth and in this segment and also 2-3 firms are available at a reasonable valuations due to the recent correction in this segment. So a small write up to clear my mind.
First the Problems:
- Very high default ratios.
- Lack of scale benefits.
- Lack of formal documents like GST Returns and CIBIL Scores.
- Lack of collection Infrastructure and Geographical penetration.
Now the Solutions:
- Securing it with their Home.
- Technology to some extent but feet on Ground are required for such business
- Again Technology to some extent but either references network may help
- Slowly expanding geography and adequate seasoning
There are few companies which fit the Bill
MASFIN, SBFC and FIVESTAR
Please share your views/ critique
Disc: I eat my pudding. Hence Please presume that I may have financial interest in some of these companies.
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