Arka Fincap launches loan service ‘Uday’ to serve MSMEs in smaller cities

Arka Fincap Limited, a subsidiary of Kirloskar Oil Engines Limited (KOEL), has introduced a new product called ‘Uday’, offering Small Ticket Loans Against Property (STLAP).

Targeted at micro, small, and medium enterprise (MSME) owners, these loans will range from ₹10 lakh to ₹30 lakh. The company aims to address the growing credit demands of small businesses in Tier II, III, and IV cities, providing crucial financial backing for their growth and expansion.

With the MSME sector facing a $530 million credit gap and struggling with formal credit access due to insufficient documentation or collateral, Arka’s LAP loan initiative prompts important questions about how effectively these barriers will be addressed to which Navin Saini, Chief Business Officer – Retail & MSME Lending says that many MSMEs do seek unsecured loans, and we already have offerings in that space. We already are providing unsecured business loans through several of our branches. However, Uday is designed for a specific segment of MSMEs who own property but lack access to structured credit.

By offering loans against property, we can provide them with lower interest rates and longer tenures, which help with more sustainable growth. Our goal is to offer a diverse range of products that cater to the varying needs of different MSMEs across the country.

With lack of structured credit, Saini explains that many MSMEs, particularly in Tier II, III, and IV cities, have access to informal lending sources—such as family, friends, or local moneylenders—who offer unregulated, high-interest loans. While these options may provide quick access to funds, they lack formal structures like fixed repayment schedules, reasonable interest rates, or long-term financial planning support.

“Uday offers structured, formal credit that provides transparency, predictable repayment plans, and access to better terms, which ultimately help MSMEs manage their growth in a more sustainable manner & also give them an opportunity to enter the formal credit system,” he said.
 
Uday would be rolled out, initially, in five key locations in Tamil Nadu viz. Salem, Vellore, Tirupur, Porur, and Coimbatore, this launch marks the beginning of a broader, pan-India expansion deeper into Bharat. Arka Fincap Limited has plans to extend the product’s reach to MSMEs across the country, ensuring that small business owners in various regions can benefit from this accessible and flexible credit solution.
 
“Our foray into the STLAP product segment with Uday is a part of our constant endeavour to empower MSMEs, particularly in underserved regions,” said Vimal Bhandari, Executive Vice Chairman and CEO, Arka Fincap. “By providing quick and reliable access to credit, we can help foster the entrepreneurial spirit in smaller cities and towns, driving growth from the grassroots level. We are committed to creating financial inclusion and supporting the backbone of India’s economy—the MSMEs.”
   
Arka Fincap’s AUM (as on June 2024) is at Rs 5,768 crore with 53% contributed by the SME business. Arka has currently rolled out this product in the Southern market which will soon be offered in other regions.