U GRO Capital files patent for scorecard based underwriting model

May 6, 2021
patent Law

U GRO Capital, a BSE listed, technology-focused small business lending platform, has filed an application with Indian Patent Office for its unique score-card-based underwriting model, in early December 2018[1]. It is the first Indian fintech player to seek such a patent.

The unique underwriting model invented by the company addresses the unavailability of appropriate micro, small and medium enterprises (MSME) databases by utilizing its distinctive statistical models[2].

The company focuses on addressing the capital needs of small businesses by providing customized loan solutions. It aims to build a strong SME financing platform based on sectoral understanding supplemented by a fully integrated technology and analytics platform.

About Patent sought-  Model and benefits

The model generates credit score cards customized to suit the peculiarities and nuances of varied business enterprises. In addition, the process is carried out by analysing the historical loan delinquency patterns and cash flow within each selected business segment.

This model has allowed the company to penetrate the unstructured segments which are driven by physical processes[3]. The utility of this model is not restricted to businesses as it enables the underwriting of individual borrowers as well.

Also, U GRO capital has shortlisted eight sectors, basis an 18-month process involving the extensive study of macro and micro economic parameters carried out in conjunction with market experts like CRISIL. The eight sectors short-listed are Healthcare, Education, Chemicals, Food Processing / FMCG, Hospitality, Electrical Equipment and Components, Auto Components, Light Engineering.[4]

Further, it facilitates trade financing by providing an assessment of downstream and upstream counterparties. Also, it provides a basis for revenue sharing in co-lending arrangements and helps estimate first loss guarantees in the securitization of transactions by providing an assessment of the underlying pool[5].

The company made a disbursement of INR 1,700 Cr in form of secure and unsecured loans. In comparison to the traditional underwriting models, this model was tested to predict superior predictable defaults and improve the GNPA and NNPA levels. With this, the company aims to target 250,000 SMEs and extend loans accounting to more than 30,000 crores in the coming four financial years.


According to Mr. Shachindra Nath, Executive Chairman and Managing Director of U GRO Capital, “only 16% of MSMEs in India receive formal credit. A major hindrance to the credit access is the limited availability of structured data pertinent to the MSME sector.” U GRO targets to combine with GST, Banking Data and emerging digital infrastructure to transform MSME financing in India.

Problems relating to financial challenges faced by  small businesses can be solved by building deep expertise across the SMEs in India with the data centric and technology enabled approach. The distinctive underwriting model of U GRO complements the digitalized processes, to provide quick and convenient access of credit to the MSME customers.

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[1] https://www.ugrocapital.com/u-gro-capital-seeks-patent-its-scorecard-based-underwriting-model

[2] Ibid.

[3] https://www.ugrocapital.com/u-gro-capital-seeks-patent-its-scorecard-based-underwriting-model

[4] http://www.businessworld.in/article/U-GRO-Capital-Launches-GRO-Micro-Expands-Its-Network-By-25-Branches/18-02-2021-378940/

[5] https://www.ugrocapital.com/u-gro-capital-seeks-patent-its-scorecard-based-underwriting-model


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