Godrej Finance Limited (GFL) has entered a co-lending partnership with Muthoot FinCorp to improve credit access for micro, small and medium enterprises (MSMEs) in Tier-2 and Tier-3 cities. The collaboration leverages Muthoot FinCorp’s wide market presence to deliver much-needed financial support to growing businesses.

The agreement focuses on providing loans against property (LAP) ranging from Rs 1 million to Rs 7.5 million, with an average ticket size of Rs 1.5 million. The product will serve MSMEs across pan-India markets where timely and accessible credit is in demand. The partnership will later expand to include other offerings such as gold loans and housing loans.

A seamless digital integration underpins the arrangement, designed to speed up loan approvals, increase transparency, and ensure compliance with the Reserve Bank of India’s co-lending framework. Godrej Finance will assume 80 per cent of the credit risk, while Muthoot FinCorp will manage the remaining 20 per cent. Muthoot FinCorp will handle underwriting, loan collections, and customer experience, while Godrej Finance ensures regulatory compliance through a jointly defined policy.

Manish Shah, MD & CEO of Godrej Capital, said timely credit is vital for business growth, particularly in smaller cities. He noted that the partnership is aimed at bridging credit gaps for MSMEs by offering faster, simpler, and transparent lending options.

Muthoot FinCorp CEO Shaji Varghese stressed the critical role of MSMEs in employment generation, second only to agriculture, and acknowledged their challenges in accessing finance. With over 3,700 branches and its Muthoot FinCorp ONE app, the company is positioned to extend services to underserved regions, with the LAP offering strengthening MSME growth.

Through Godrej Finance, GFL already provides a wide range of business loan products, including unsecured business loans and Udyog LAP for smaller financing needs. The partnership expects to disburse Rs 2.5 billion in the current financial year, with a focus on high-potential markets in Northern, Southern, and Western India.