SBFC, a Mumbai-based financial services institution providing loans to MSMEs, has secured Rs 400 crore ($46.15 million) in financing from the UK’s development finance institution, British International Investment (BII), to help small businesses and women entrepreneurs in India grow their businesses.
“This fundraise will help us fund more low-income entrepreneurs and women who want to make a difference in society,” Narayan Barasia, CFO at SBFC, said in a release.
Low-income entrepreneurs and women entrepreneurs are the two most underserved target groups within the MSME segment as they are mostly ignored by the traditional banking system. SBFC aims to use the fresh funds to bridge this financing gap by equally distributing it among the two groups. It expects the expanded access to finance to help up to 5,000 customers in improving economic opportunities and income levels.
“These underserved groups often face significant barriers to accessing finance. This is where development finance institutions like ours can play a crucial role in breaking down these barriers,” Gaurav Malhotra, director for financial services at BII, said in the release.
“In India, access to credit is a challenge with large population of rural and semi-urban India needing a helping hand to enhance their businesses. The partnership with BII will serve as a catalyst for empowering these borrowers and to amplify our efforts in supporting the underserved,” Barasia said.
SBFC secured a pre-IPO funding of Rs 150 crore from Singapore-based Amansa Capital in 2023.
Established in 2017, SBFC is a RBI registered non-banking financial company that provides MSME loans, gold loans, home loans, and loan management. It currently has more than 4,000 employees and serves more than 164,000 customers across 157 cities in the country that includes many Tier II and Tier III cities.
MSMEs play a significant role in the economic growth of the country by providing employment opportunities, especially in the rural and underdeveloped areas, promoting entrepreneurship and innovation, driving productivity. Often, they are an integral part of the value chain of large industries by serving as suppliers and subcontractors of raw materials and components to them.
Women entrepreneurs are making progress in setting up businesses across several sectors including food and beverage, technology, fashion, real estate, and others. They have also played a crucial role in generating employment. Women-owned MSMEs constitute 20.5% of the total number of MSMEs in India, according to the Udyam Registration Portal of the Ministry of MSMEs.
NBFCs lending to MSMEs in 2022-2023 registered a 42.4% YoY increase, while banks recorded a modest 12.4% increase, according to RBI.
