Sanjay Phadke

UGRO Capital convenes policymakers and financiers to align regulation, capital and technology to narrow India’s MSME credit gap Read More: https://lnkd.in/gzb9meaQ Mangal Prabhat Lodha | Ravi Ranjan | Manoj Mittal | Shachindra Nath Annurag Batra | Noor Fathima Warsia | Tanvie Ahuja #MSMEFinance #UGroCapital #CreditGap #IndianEconomy #BankingPolicy

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Structuring Pre-IPO Investments in Indian SMEs: Why CCPS is the Preferred Choice Pre-IPO investments in Indian SMEs (typically companies preparing for an SME IPO on platforms like NSE Emerge or BSE SME) are a critical stage for raising growth capital while aligning interests between investors and founders. Unlike early-stage funding, pre-IPO rounds often involve more sophisticated investors (e.g., private equity, HNIs, or institutional funds) seeking protection against downside risks while positioning for upside in the upcoming listing. Key Reasons to Use Compulsorily Convertible Preference Shares (CCPS) for Pre-IPO Funding Under Indian company law (Companies Act, 2013), straight equity shares put investors and founders on equal footing immediately. This exposes investors to full downside risk without protections like liquidation preference or priority payouts. CCPS, however, is a hybrid instrument that offers: • Preferential rights on dividends, liquidation, or exit (e.g., 1x non-participating preference — investor gets their investment back first before common shareholders). • Mandatory conversion into equity shares at pre-agreed terms (often triggered by events like IPO, a qualified funding round, or a long-stop date, typically within 20 years). • No debt-like obligations — unlike convertible debentures, CCPS avoids interest payments and is treated as equity under FDI/FEMA regulations. This structure allows investors to price in risk without distorting the company’s valuation or control at entry. It’s the standard in almost every institutional pre-IPO term sheet for SMEs. Practical Example Suppose an SME raises ₹15 crore pre-IPO through CCPS from a PE fund: • Issue price: At a negotiated valuation (e.g., ₹50 crore pre-money). • Terms — 1x liquidation preference, anti-dilution protection (broad-based weighted average), and compulsory conversion upon IPO filing or within 18-24 months. • Outcome: • If the SME underperforms or exits early → Investor gets preferential payout. • If the company lists successfully → CCPS converts to equity at the agreed ratio, allowing participation in post-IPO upside (often at a discount or with anti-dilution safeguards). Straight equity would force equal treatment from day one, making downside protection harder without complex side agreements. In India’s booming SME IPO market, smart pre-IPO structuring with CCPS can make the difference between a successful listing and a missed opportunity. #PreIPO #SMEIPO #CCPS #StartupFunding #IndianMarkets #VentureCapital #PrivateEquity Equibeeipo

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Big regulatory signals for India’s NBFC sector! Yesterday (Feb 26, 2026), the Department of Financial Services (DFS) held a key meeting with top NBFC representatives (including FIDC India , Sa-Dhan Association , and Microfinance Industry Network (MFIN) ) to discuss long-pending reforms. Key highlights from the agenda: • Governance upgrades — Better leadership rotation and clearer pathways for NBFCs to become full-fledged banks (reviving the 2020 IWG recommendations for large NBFCs with ₹50,000 Cr+ assets). • A new comprehensive reform index for NBFCs to measure progress and stability. • Easing measures like streamlined KYC, relaxed branch licensing for gold-loan NBFCs, aligned risk-weights with banks, reduced bond haircuts (from flat 50% to graded based on ratings), and an AI-powered Digital Payments Intelligence Platform to fight frauds. This comes right after the Union Budget’s push for a High-Level Committee on Banking for Viksit Bharat, while new bank licences remain paused. It could open doors for select large NBFCs to transition into universal banks — similar to the Small Finance Bank model — deepening financial inclusion and intermediation. A follow-up meeting with the Finance Secretary is already lined up next week. Drop your views in the comments 👇 NBFC Advisor GenZCFO #NBFC #BankingReforms #DFS #RBI #ViksitBharat #FinanceIndia #FinancialInclusion #Governance #DigitalPayments #FinTech

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Most NBFC boards I meet believe they're SBR-compliant. Most of them are — on paper. RBI's Scale Based Regulation doesn't just ask you to tick boxes. It asks specific questions about what your board actually does. Here's what's genuinely required versus what most boards think is required: 𝐖𝐡𝐚𝐭 𝐑𝐁𝐈 𝐚𝐜𝐭𝐮𝐚𝐥𝐥𝐲 𝐚𝐬𝐤𝐬 𝐟𝐨𝐫: → A Risk Management Committee that meets and genuinely reviews risk — not one that exists in the org chart → A functioning Chief Risk Officer with real reporting independence, not a title bolted onto an existing role → An IT Strategy Committee overseeing technology risk — increasingly non-negotiable as NBFCs digitise lending → Independent Directors who bring genuine challenge, not familiar faces filling a regulatory quota → Internal Audit that reports to the Audit Committee, not to management it's meant to be checking Here's the pattern I keep seeing: NBFCs build the 𝐬𝐭𝐫𝐮𝐜𝐭𝐮𝐫𝐞 — the committees exist, the charters are written, the org chart looks compliant. Almost none have built the 𝐬𝐮𝐛𝐬𝐭𝐚𝐧𝐜𝐞 — the committees that actually deliberate, challenge, and change outcomes. RBI's inspection checks for structure. Your business survives on substance. If you're a Middle Layer NBFC (or approaching that threshold), the gap between the two is usually the difference between passing an inspection and surviving a real crisis. #NBFCGovernance #RBICompliance #ScaleBasedRegulation #BoardGovernance #IndiaGovernance

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SEBI Simplifies Regulatory Reporting 📊 SEBI has just announced a significant update to the reporting framework for Alternative Investment Funds (AIFs), aimed at reducing the compliance burden and fostering "Ease of Doing Business". As Fund Administrators, it's vital to note the shift from standard quarterly filings to a more structured approach: ✅ New Annual Activity Report: A comprehensive filing due within 30 days of the financial year-end via the SEBI Intermediary (SI) Portal. ✅ Revised Quarterly Reporting: A "limited" version of the activity report, also via the SI Portal. ✅ Efficiency Gain: No more separate quarterly reports for the March quarter—the Annual Report covers it all. Key Deadlines to Watch: - May 31, 2026: Deadline for the first-ever Annual Activity Report (for FY 2025-26). - June 2026: The first "Limited" Quarterly Report under the new format will be due after this quarter. The revised formats will be available on the IVCA website shortly. This is a welcome move toward a more digital and streamlined compliance era for Indian private equity and venture capital. #AIF #AlternativeInvestments #SEBI #RegulatoryCompliance #VentureCapital #PrivateEquity #FundAdministration

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Frugality index better measure than PPP PPP measures relative cost of burgers FI measures cost of developing tech. The multilateral banks developed the concept of purchase power parity. It is a nice framework. It basically says that the burger which costs USD 4 in USA will cost USD 1 in India. It is a measure of input costs. So if the salary of a professor is USD 200,000 in usa, equivalent person working in IITB will probably get paid USD 50,000. So somewhere this 4:1 ratio became some kind of a norm. But when it comes to the cost of research we find an exponential ratio at work. So it is the inefficiency of the overall system which kicks in. And therefore the cost of American living makes the cost multiple for research work done in the U.S. to way more than 4:1. More like 10:1. Ai is all set to disrupt this ratio. In India, just like servants at home make many more productive at their job, assistants and helpers in office help to make the senior person far more productive. Ai is exponentially increasing this difference. So whilst Americans at Stanford spend a lot of their time doing their dishes and laundry, the researchers are very busy at work. Whilst the Stanford professor is engaged driving his car and cleaning it - the Indian is using all the time to increase his delivery capacity whilst someone else drives him to work and cleans his car. With stable marriages and a strong family support ecosystem - minimal time is spent chasing dates or drafting pre nuptial agreements with divorce lawyers. All of this ends up in a frugality index (FI) which way way higher than purchase parity. FI measures the relative costs of doing something in the contract research domain. An index of ten means that it costs 10 times more to do the same activity in USa. Thanks to ai, the frugality index is exploding. Starting at around 10, around five years ago - it has now reached 100. And is on its way to get to 1000. This really means ai just made us 10 or 100 times more cost competitive. And this is just the beginning. It is a matter of time before pension funds become insolvent and westerners have to shift to India to afford old age. Or to work if they are younger. As a country we will see people inflows of an unprecedented magnitude from the Global North. And we need to figure out an entry tax on them. Stanford’s annual spend: $18.9 billion. MIT: $4.78 billion. IIT Bombay: $135 million IIT Madras: $71 million. $18.9 billion vs $135 million. That’s not a gap. It’s a two zero chasm. But let’s come to outcomes: Stanford PhDs pa: 714 IITB PhDs pa: 560 Stanford BS pa: 840 IITB BTech pa: 1125 Now come to broader impact: Stanford alumni: 2,10,000 IITB alumni: 1,82,000 Investable funds in alumni control Stanford alumni: USD 400 billion IITB alumni: USD 1 trillion

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