Public sector lender Uco Bank is working on a mechanism to assess loans to MSMEs, under the central government’s Mudra scheme, that envisages engaging 10-15 fintech companies which will automate the approval process, amid concerns over the Mudra loans turning into bad assets.

RBI deputy governor M.K. Singh had expressed his concerns over the rising stressed assets under Mudra. Besides, banks have raised questions over the end use of the loan.

“In small accounts (advances upto Rs 50,000), there are some issues. In bigger accounts it s not that much. It is a matter of due diligence,” said A.K. Goel, managing director and CEO of Uco Bank.

The bank is in the process of onboarding 10-15 financial technology companies .

“ It is not humanly possibly to look into all the possible variables. So we need to have an algorithm. These fintech companies will develop a system that can read the balance sheets, bank statements, IT, GST returns and that will immediately improve the underwriting standards,” Ajay Vyas, executive director of Uco said.

Iran operation

Amid the ongoing geopolitical tension, Uco has decided to put its plan to convert its representative office in Iran into a branch on hold. Oil imports have shrunk after the imposition of sanctions. However, there is still an outflow on account of exports, officials said.