A NBFC To Take Care Of MSES In The Manufacturing Sector

A unique experiment to nurse ailing MSEs back to health:

The effort is described as a ‘diagnostic’ and ‘curative’ organizational innovation initiative by the Telangana government for the exclusive benefit of medium and small enterprises in the manufacturing sector. The aim is to resolve the issue of stressed assets of these MSEs, as it was found that all attempts at revival thus far by both the RBI following various committees’ recommendations from time to time and government of India did not bear fruit.

The initiative is Telangana Industrial Health Clinic (TIHCL), which is a fintechdriven NBFC, registered by the RBI and funded by the government of Telangana (to the extent of 10% of the initial corpus of ₹1 billion) and MSEs availing services from us (5% of the corpus and they invest 1% of the funded loan with a minimum of ₹10,000 and maximum of ₹200,000), industry associations, strategic partners, banks and financial institutions and HNIs (to the extent of the balance of the initial corpus). The company has represented to the RBI to classify loans and investments in the company as part of priority sector target of the banks. About 30 MSEs which realized the benefits from the TIHCL through its counselling, mentoring and liaison with banks, have already invested with us ₹500,000. TIHCL has promised a yield of 7% pa to these investors after a lock-in period of 2 years.

LACK OF COUNSELLING

“We noticed that the manufacturing MSEs operate only in debt markets and are often starved of affordable consulting and credit at the right time and in appropriate doses to scale up the operations,” says Dr B. Yerram Raju, former career banker, economist and risk management specialist, who is an advisor to the Telangana government and one of prime movers behind TIHCL.