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Veritas Finance Profile

Veritas Finance has been promoted with a primary purpose of meeting the working capital and business credit requirements of the small businesses in the MSME sector. An organization run by professionals with rich experience in financial services industry, Veritas Finance aims to make availing credit easy to this segment which has remained largely underserved despite several initiatives.

MSME Sector

The Term MSME is widely used to describe small businesses in the private sector. According to the Fourth Annual Census on MSMEs (2006-07) presented in the Annual Report 2013-14 on MSMEs, by the ministry, the enterprises in the sector, estimated at 36 million in the sector is projected to have grown to 46 million enterprises in 2012-13 While only small percentage of units are registered, close to 26 million units are unregistered. Further, in addition to the registered and unregistered enterprises, it is estimated that the Sector has an additional 30 million enterprises, which are unorganized and function without any legal framework. Activities of these units are not governed by any legal provision and these enterprises typically do not maintain any official financial accounts. Most of these can be classified in the category of micro enterprises.

Small Business Financing

The micro enterprises in the MSME sector are extremely heterogeneous. Most of these enterprises are in services sector and are engaged in retail businesses which include catering, canteens, provision shops, pharmacy, auto service, bakery, saloon etc. Some of them run ancillary units attached to medium or large enterprises and do contract work or job order. They transact largely in cash and hence do not have accurately recorded financials. Lack of financial documentation makes credit assessment a challenging task. The Financial institutions which rely heavily on core banking technology infrastructure and CRM systems, therefore, often find it difficult to corroborate the financial information from the micro enterprises, for an objective credit analysis. The credit assessment process, more often, is similar in length and complexity regardless of the size of enterprise or credit requirement. As the enterprises in these sector are not well organized and do not maintain financial records properly they find it difficult to fit them into these guidelines.

Veritas Finance – Paving the way

Veritas Finance, with a specific focus to this segment, has developed a unique credit assessment methodology to reach out to these enterprises which relies, among other things, heavily on self assessment, expenses and lifestyle correlation, asset creation tendencies, family background, exhaustive reference checks.