National development bank Sidbi (Small Industries Development Bank of India) has introduced a growth accelerator program aimed at assisting small NBFCs (non-banking finance companies) in qualifying for bank funding. The program, conducted in collaboration with the Global Alliance for Mass Entrepreneurship and the national NBFC lobby Finance Industry Development Council, has onboarded the first group of 18 small NBFCs for a five-month-long initiative.
The primary objective of this program is to enable small NBFCs to scale through design interventions, allowing them to apply for institutional funding based on comprehensive evaluation parameters, according to Sivasubramanian Ramann, Chairman and Managing Director of Sidbi. The program incorporates mentorship from domain experts in areas like risk, operations, governance, and technology. It is structured to promote peer learning, reviews, and networking, utilizing a combination of in-person, virtual, and personalized sessions, explained Umesh Revankar, Chairman of FIDC and Executive Vice-Chairman of Shriram Finance.
Highlighting the substantial untapped market for MSME (micro, small & medium enterprise) funding, Ramann noted that out of nearly 80 million small businesses, only 15 percent have access to formal credit. He stated that Sidbi’s lending to MSMEs has doubled in the past three years, crossing the Rs 50,000 crore mark, with the overall system-wide MSME loan book reaching Rs 25 lakh crore and projected to double in the next three years. Currently, only 28 percent of the existing MSME book is met by NBFCs.
The program’s objective is to design a replicable model that enables MSME-focused NBFCs to qualify for formal funding and be prepared for the future, as stated by Ravi Venkatesan, Founder of the Global Alliance for Mass Entrepreneurship. Regarding the lending amount Sidbi will provide to NBFCs through this initiative, Ramann clarified that there is no set target or cap, with the outcome depending on how many successfully complete the program. By facilitating institutional funding for NBFCs, the program is expected to enhance the fund flow for the MSME sector.
The initial group of 18 participating NBFCs will receive specific advice, interact informally with peers, and undergo structured reviews, and evaluations to demonstrate action for eligibility to advance to the next stage.
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Revealing the plan for the next three years, Ramann stated “We have built in the process to ensure that participants demonstrate action to be eligible for continuing to the next stage and mentors endorse and support them ensuring accountability and over the next three years, the plan is to prepare 100 non-banks future-ready.
