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U GRO Capital seeks patent for its scorecard based underwriting model


U GRO Capital has announced that it has filed an application with the Indian Patent Office for its methods and systems for modelling scorecards. This has allowed the company to penetrate in an unstructured segment, which is driven by physical processes. The model tackles the unavailability of appropriate MSME database, by utilizing its classification technique leveraging the proprietary knowledge base and strength of statistical models.

The underwriting model generates credit score cards customized to suit the nuances of varied business enterprises. This is done by analysing the historical loan delinquency patterns and cash flow within each selected business segment. The model’s utility enables underwriting of individual borrowers, as well. Further, it facilitates trade financing by providing assessment of downstream and upstream counterparties and provides a basis for revenue sharing in co-lending arrangements and helps estimate first loss guarantees in securitization of transactions by providing an assessment of the underlying pool.

U GRO Capital has been using this model since its inception in 2018. The company has made disbursals of Rs 1,700 crore in the form of secured and unsecured loans. This model is tested to forecast superior predictable defaults and improve the GNPA and NNPA levels in comparison to the traditional underwriting model and improve the bureau defined predictable defaults of different score level. Going forward, the company aims to target 250,000 SMEs and extend loans amounting to more than Rs 30,000 crore in the coming four financial years.

The scorecards for assessment at various stages have been developed in consultations with CRIF and CRISIL market experts. The model is able to approve credit for business enterprises within minutes. It allows scope for refinement and upgradation so that a newly identified data variable can be integrated to derive more accurate output. The model combined with the organization’s technological capabilities in artificial intelligence and machine learning, has rendered the credit access journey in a quick and convenient manner.

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In a statement, Shachindra Nath, Executive Chairman and Managing Director of U GRO Capital said, “The MSME sector is a significant driver of the Indian economy, yet only 16% of MSMEs in India receive formal credit. A major hindrance to the credit access is the limited availability of structured data pertinent to the MSME sector. We believe that MSME financing in India is at the verge of transformation with the combination of GST, Banking Data and emergence of digital infrastructure which is underpinning this transformation.”





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