Arka Fincap Limited, a subsidiary of Kirloskar Oil Engines Limited (KOEL), has launched a new product named ‘Uday’, which provides Small Ticket Loans Against Property (STLAP).
Loans for micro, small, and medium enterprises (MSME) owners would range from ₹10 lakh to ₹30 lakh. The organization intends to meet the expanding credit demands of small enterprises in Tier II, III, and IV cities by providing critical financial support for their development and expansion.
With the MSME sector suffering a $530 million credit gap and struggling with formal credit access owing to insufficient documentation or collateral, Arka’s LAP loan project raises crucial issues about how successfully these hurdles will be handled, as Navin Saini,
According to our Chief Business Officer for Retail and MSME Lending, many MSMEs want unsecured loans, and we already have offers in that market. We currently provide unsecured business loans through numerous of our offices. However, Uday is intended for a certain subset of MSMEs that own property but do not have access to structured loans.
By issuing loans against property, we may give them cheaper interest rates and longer terms, resulting in more sustainable growth. Our purpose is to provide a varied choice of products that meet the unique demands of MSMEs across the country. In the absence of structured financing, Saini adds that many MSMEs, particularly in Tier II, III, and IV towns, have access to informal loan sources—such as family, friends,
Alternatively, local moneylenders provide unregulated, high-interest loans. While these choices may give rapid access to cash, they lack formal frameworks such as defined repayment schedules, low interest rates, and long-term financial planning assistance. provide them an opportunity to enter the official credit system,” he stated.”
Uday will be first available in five important places in Tamil Nadu: Salem, Vellore, Tirupur, Porur, and Coimbatore. This launch signals the start of a larger, pan-India push deeper into Bharat. Arka Fincap Limited intends to broaden the product’s reach to MSMEs across the country.
“Our entry into the STLAP product segment with Uday is part of our ongoing efforts to empower MSMEs, particularly in underserved areas,” stated Vimal Bhandari, Executive Vice Chairman and CEO of Arka Fincap. “By offering rapid and dependable access to financing, we can assist and encourage the entrepreneurial spirit in smaller communities and villages, spurring growth from the ground up. We are dedicated to promoting financial inclusion and helping the MSMEs that are the backbone of India’s economy.”
Arka Fincap’s AUM (as of June 2024) is Rs 5,768 crore, with 53% provided by the SME division. Arka is now rolling out this product in the Southern market, and it will soon be available in other regions.