How Finezza Helped Gromor & Udhyam Alter Bengaluru’s Iron-walas

In addition to helping leading NBFCs and banks optimise their lending lifecycles and processes, Finezza is also helping small businesses get access to credit in an efficient manner.

Small and medium enterprises (SMEs) are the largest employment generators in the country with more than 40% of the total workforce employed by it. Since the sector is largely unorganised, SMEs often do not maintain proper books of accounts and cannot provide financial information for lending companies to decide whether they are creditworthy. For self-employed people engaged in co-operative small scale enterprises, the situation is not much better.

When it comes to the SMEs, getting access to credit financing is essential for survival. As many of these businesses depend on seasonal demand, the lack of cash flow can severely affect their operations. From inventory to labour, an SME’s long term viability depends on the availability of easy credit at low-interest rates. With the government backing the sector, new opportunities for financing have become available for India’s small business and entrepreneurship ecosystem.

In urban and semi-urban areas, self-employed individuals running small businesses like grocery stores, car repair centres, etc. also require loans from time to time. A number of lending companies are now tapping this unmet need for financing with instant credit approval and release of funds using Fintech platforms like Finezza.

One such company is Gromor Finance. Finezza partnered with Gromor Finance to help them make their loan lending lifecycle transparent, fair and quick. This, in turn, allows them to win the trust of customers and improve market share.

From finding qualified leads, assessing creditworthiness and managing the entire loan lending lifecycle from disbursal to re-payment, Finezza offers solutions across the enterprise. This enables Gromor Finance to focus on their customers whilst leveraging a proven platform to handle operational aspects.

Here’s a compelling story of how Gromor finance tied up with Udhyam Learning Foundation, an NGO with a CSR initiative to help local iron-walas in Bengaluru to make a radical transformation in their lives.

Helping Bengaluru’s local iron-walas to Improve their Incomes

A Quick Background of the Story

A sizeable population of iron-walas who reside in Bengaluru had been working with coal-based iron boxes, which were not only energy-intensive but also a health hazard. Udhyam Learning Foundation interacted with these gritty people, studied their problems and offered a sustainable solution.

It was noticed that these iron-walas had been using old coal-based iron boxes for decades. Not only was ironing with these boxes cumbersome and more time-consuming, but it also damaged the quality of the clothes over time. Udhyam found a more eco-friendly and user-friendly alternative: LPG-based heating for the iron box.

These LPG-based iron boxes reduced the overall ironing time, helping iron-walas to earn more income ironing even more clothes than before. Also, these boxes brought down the overall cost of ironing from INR 1 per cloth to 50 paise.

Acquiring Capital Investment to Make the Change

In order for these iron-walas to make the transition, capital investment to purchase the new iron box was necessary. When most financial institutions were sceptical, Gromor Finance quickly pitched in. Gromor decided to provide small loans of approximately Rs.9,000 each at low-interest rates to these iron-walas.

Finezza’s Pivotal Role in Empowering Gromor Finance to Provide Loan Services to Iron-Walas

When several institutions rejected Udhyam’s plea for loans to help iron-walas, Gromor Finance was able to accept it because of Finezza’s back-end support. Gromor Finance was able to assess the creditworthiness of the iron-walas using Finezza’s credit risk management feature, disbursing loans quickly to these small-time entrepreneurs.

Gromor also realised the importance of educating the iron-walas on basic concepts of financial literacy, making digital payments and inculcating the behavior of repayment, to recover its investment. While this was taken care of by Udhyam, assessing the credit-worthiness of each individual iron-wala, ensuring a smooth disbursal of the loan and managing default risk was aided by Finezza’s proven algorithms.

How Finezza’s Robust Lending Management Solution Helped Gromor Finance

1. Quick Credit Assessment

Perhaps the biggest challenge that Gromor Finance would have faced in making the decision to provide loans to iron-walas is assessing the credit-worthiness of each individual. How can they be sure, if the iron-walas can repay the loans? Gromor had to ensure that the niche was sustainable over the long term.

While most of the loan management solutions primarily take into consideration the credit score of the individual to help them assess their current standing, these local iron-walas did not have any credit score to start with. Most of them rely on local lending agents to avail quick loans and have minimal knowledge about bank loans.

Without any credit score in most of the cases, other means of ascertaining the financial history was the need of the hour. Manually assessing each individual’s credit-worthiness was another option, but certainly, it would have been cumbersome and time-consuming.

This is where Finezza’s 360-degree credit-assessment view came in handy. Gromor Finance was quickly able to assess the credit-worthiness using other means like bank statements and KYC framework through the readily available Aadhar card, PAN card and other key Identity Proofs. This provided a realistic and clear picture of the potential for successful loan repayments in the future.

The KYC framework of Finezza is powered by modern technologies such as machine learning and artificial intelligence. It helps to compile and store customer data from various sources to give a clear idea of the customer’s financial history.

2. Robust Lending Management

Secondly, a quicker loan turn-around time was also important in this case. Finezza’s effective lending management solution provided a smooth disbursal of the loan with faster credit assessment and a single system to manage all the loans.

Without any data silos, Gromor Finance was able to quickly serve the needs of iron-walas in Bengaluru with a unified system for the end-to-end loan lifecycle. It greatly reduced the turnaround time for a credit decision with accurate analysis and prediction models.

When banks and other financial institutions tend to neglect the unorganised sector, Gromor Finance was able to quickly seize the opportunity to make financing available to an untapped market potentially worth crores of rupees, thanks to Udhyam’s initiative.

Finezza’s AI-based decision support features helped Gromor leverage alternate sources for building a credit risk model, cutting down processing time and improving lending flexibility. Gromor was also able to discharge its Corporate Social Responsibility (CSR) obligation by supporting an economically vulnerable class of citizens.

Customer data can yield important insights into consumer behaviour and credit risk potential. Lending management systems like Finezza make lending decision predictable and in this case, brings the benefits of financial inclusion to the grassroots level.

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