MSME Lender Swara Fincare Raises Funds From UC Impower To Double AUM

MSME-focussed non banking finance company (NBFC) Swara Fincare has raised INR 19.4 Cr (around $2.3 Mn) in a Series A funding round led by Bengaluru-based venture capital firm Unitus Capital’s UC Impower fund.

The round also saw participation from Piper Serica Angel Fund as well as an internal infusion from Swara Fincare’s founders Dev Verma, Mukund Madhav and Sumit Ranjan.

Founded by the trio in 2022, the fintech NBFC is looking to double its assets under management by the end of this financial year. The company said it would deploy funds to sharpen its focus in driving financial inclusion for micro and small entrepreneurs, while also boosting its distribution network, developing lending products, and enhancing the technology platform.

Swara Fincare primarily offers loans to micro and small entrepreneurs in India’s Tier 3 and 4 cities. It claims to have an offline presence through 45 branches across Uttar Pradesh, Haryana, Rajasthan, Bihar, and Uttarakhand. 

Swara Fincare also claims to have debt support from over 30 prominent financial institutions, banks and three colending partnerships to sustain and propel its growth ahead.

“The stellar and experienced team of UC Impower, coupled with the diversified new age built of Piper Serica forms a partnership that truly sets the stage for Swara to navigate its next phase of evolution,” cofounder, managing director and CEO Verma said.

In recent weeks, the Reserve Bank of India has tightened NBFC norms in relation to withdrawals and emergency refunds by depositors. From January 2025, NBFCs will be required to return the full deposit amount to depositors if such requests are made in emergency situations.

Further, there are other proposed changes to the liquidity coverage ratio (LCR), which, if implemented, will likely make it more difficult for low-rated NBFCs to obtain cheaper credit from banks and other RBI-regulated lenders. 

However, for NBFCs, lending remains a massive opportunity not just in the context of MSMEs, but also small ticket personal loans, durables purchases and even retail purchases — especially in the ongoing festive season. 

Partnerships between fintech startups and NBFCs, fuelled by recent investor activity, has also led to new products such as secured lending. 

Examples of recent funding rounds include Flexiloans, which raised INR 290 Cr (around $34.5 Mn) in its Series C round in September, while Mumbai-based Arthan Finance secured INR 50 Cr ($5.98 Mn) in June this year. 

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