According to The Hindu BusinessLine, Shachindra Nath, Founder & Managing Director of UGRO Capital, emphasized that credit guarantee schemes should reward portfolio performance rather than just disbursement volumes to support micro, small and medium enterprises (MSMEs). The industry expert noted that lenders must recognize that MSME lending requires sector knowledge, prudent assessment, and continuous post-disbursement engagement, distinguishing it from mass retail lending.
As reported by The Hindu BusinessLine, Nath underscored that while credit guarantee schemes like CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises) are playing an important role in enabling MSME credit, they cannot substitute underwriting discipline. The UGRO Capital chief warned that when lenders rely excessively on guarantees, moral hazard increases and asset quality deteriorates over time. He emphasized that guarantees should support inclusion at the margin, not compensate for inadequate assessment.
According to The Hindu BusinessLine, Nath observed that regulators should continue strengthening digital public infrastructure including GST, Account Aggregator and OCEN (open credit enablement network). The industry expert noted that lenders should be nudged towards sector-specific underwriting instead of uniform credit norms to improve MSME lending effectiveness.
As reported by The Hindu BusinessLine, Nath observed that the new labour codes will require MSMEs, particularly smaller enterprises, to manage compliance and cost adjustments in the short term, potentially creating operational friction. However, over the medium to long term, labour formalisation improves productivity, workforce stability, and transparency. From a lender's perspective, formal employment records enhance confidence in enterprise sustainability and improve credit assessment, though he emphasized that phased implementation with adequate support is crucial to ensure compliance requirements do not become growth constraints.
