Every morning across India, small factories hum to life, shop shutters rise in narrow bylanes and local entrepreneurs begin their grind - powering what we often call the backbone of the Indian economy. Yet, for all their grit and contribution, India’s 63 million+ MSMEs face a staggering formal credit gap of ₹32.5 lakh crore. UGRO Capital’s latest Social Impact Report for 2024–25 dives deep into how strategic, data-driven lending is not only bridging this gap but also transforming lives, creating jobs, and fuelling the next wave of inclusive growth.
Transformative Growth for Indian MSMEs
UGRO Capital, in collaboration with Dun & Bradstreet, has just released its third annual Social Impact Report for 2024–25, offering an in-depth assessment of its growing influence on India’s Micro, Small, and Medium Enterprises (MSMEs). The report outlines the lender’s expanding role in bridging the credit gap, fuelling economic growth, enabling job creation, and fostering digital transformation across India.
Often referred to as the “backbone of the Indian economy,” MSMEs contribute nearly 30% to India’s GDP, one-third to manufacturing output, and almost half of the country’s total exports. With over 120 million people employed in this sector, it is second only to agriculture in job generation.
Despite this vital role, MSMEs face a staggering formal credit gap of ₹32.5 trillion against a total addressable demand of ₹103 trillion. UGRO Capital has positioned itself at the heart of this challenge, anchored by its belief that “MSME Accha Hai” (MSME is good).
Strategic Growth and Credit Expansion
UGRO Capital’s strategy revolves around data-driven lending and responsible finance. With a strong ESG (Environmental, Social, and Governance) foundation, the company has successfully served over 135,000 MSMEs across varied geographies.
Its growth in reach and assets under management (AUM) has been nothing short of remarkable. The number of funded MSMEs surged from 23,000 in 2022 to 135,000 by January 2025, while AUM quadrupled from ₹2,932 crore to ₹11,067 crore over the same period. This expansion underscores the company’s growing footprint in empowering entrepreneurs to scale, innovate and generate employment.
Notably, UGRO Capital’s push into non-metro markets is also paying dividends. AUM in Tier 3 and beyond geographies jumped from ₹1,144 crore in March 2024 to ₹2,073 crore by January 2025, reflecting the lender’s focus on enabling inclusion in emerging India.
Boosting Inclusion and First-Time Entrepreneurship
Gender inclusion is a clear priority for UGRO Capital. Women-led businesses currently comprise 9% of the company’s MSME portfolio, with the number of women entrepreneurs growing from 5,717 in September 2023 to 9,953 as of now. This momentum is particularly significant, given the systemic challenges women face in accessing credit.
The report also reveals a surge in first-generation entrepreneurs. A full 78% of surveyed borrowers are first-time business owners, often starting with their own savings but lacking formal credit histories. UGRO Capital’s tailored lending approach enables these entrepreneurs to formalise operations, build creditworthiness and unlock long-term capital access.
The economic impact is telling: 88% of MSMEs surveyed reported revenue growth post-funding. Within this, 35% saw 21–30% growth, 16% experienced 11–20% growth, and 49% saw a 0–10% increase. This capital infusion (totalling ₹11,067 crore) was largely directed toward enhancing production and sales capacity—leading to a significant rise in employment, including 13,446 overall jobs and 3,042 for women.
MSMEs Go Digital
Post-loan, a sizeable number of MSMEs adopted digital solutions. These included a 28% increase in online marketplace sales, a 15% shift in procurement to digital platforms, a 23% growth in digital banking usage, and a 13% rise in digital marketing adoption. This reflects the digital shift taking hold in India’s small business sector, powered by accessible capital.
Sustainable and Responsible Finance
UGRO Capital continues to build its ESG credentials. Every borrower is assessed using a structured ESG Scorecard with objective, weighted criteria. It also maintains a strict exclusion list, steering clear of sectors involving illegal practices, child labour, gambling, and radioactive materials, among others.
The firm aligns its practices with multiple UN Sustainable Development Goals (SDGs). Some key highlights include:
|
SDG Goal |
Impact Metric |
|
Gender Equality |
9% female ownership, 76% co-ownership among borrowers |
|
Economic Growth |
88% of borrowers saw revenue growth |
|
Productivity |
₹1,500 crore AUM deployed across 4,805 entities for machinery upgrades |
|
Renewable Energy |
₹374 crore AUM across 2,283 borrowers in the clean energy space |
|
SME Finance Access |
Over 135,000 MSMEs funded with AUM of ₹11,067 crore |
|
Health Coverage |
₹430 crore AUM across 1,692 borrowers in healthcare |
Measuring Emissions, Tracking Impact
UGRO Capital reports zero Scope 1 emissions as it operates from leased facilities. Scope 2 emissions (from purchased electricity) are highest in Maharashtra, Delhi, and Tamil Nadu. It also tracks Scope 3 emissions from its lending portfolio using PCAF methodology.
Top contributors to UGRO Capital’s carbon footprint include Light Engineering (₹761 crore), Chemicals (₹439 crore), and Auto Components (₹359 crore). Peer comparisons suggest UGRO Capital maintains strong carbon efficiency relative to sector benchmarks.
Borrower Experience and the Road Ahead
The sample of 508 MSME borrowers across 12 cities studied for the report reveals high customer satisfaction. 85% were satisfied with UGRO’s loan terms, 82% said they would recommend UGRO Capital, and 84% rated the documentation process as 4 or 5 on a 5-point scale.
Looking ahead, UGRO Capital plans to deepen its presence in Tier 2 and Tier 3 cities, expand its green financing offerings (EVs, solar, WASH, energy-efficient tech), and build partnerships with DFIs and FDI entities.
The company’s focus on AI, data analytics and alternative credit models will further support underbanked segments - particularly new-to-credit and women-led enterprises - by offering faster, more seamless loan access.
Says Irem Sayeed, Chief Credit Officer, UGRO Capital, “This report isn’t just about metrics - it’s about momentum. It shows how timely, data-driven credit can unlock real change: more jobs, stronger women-led businesses, greener practices and confident first-time entrepreneurs. MSMEs don’t just need financing - they need belief. And that belief is what UGRO stands for.”
UGRO Capital’s Social Impact Report paints a clear picture: with the right backing, MSMEs can fuel India’s next wave of inclusive and resilient growth.
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