SBI, the biggest lender in the country, recently expressed that MSME lending is going to be the “focal point” for growth and development for the next five years. With this statement, the SBI launched a unique product called “SME Digital Business Loans”. Here, SME represents the small and medium enterprises. What is different and unique about these SME Digital Business loans is that their sanction is only going to take 45 minutes.
Reasons Behind The Move
An official statement by the bank said that the advances for the micro, small, and medium enterprises are going to be the focal point of the bank’s profitability and growth for the coming 5 years.
Further, according to the data noted on 31st March 2024, the small and medium enterprises book of the bank saw an increase of 20% with a value of ₹4.33 lakh crores while the gross NPAs in the book went low to 3.75%, which was earlier recorded at 9.43% for the financial year of 2020.
The bank clarified that this new product is going to be a “significant leap forward” in the economy’s digitisation. The SMEs can now enjoy easy and quick accessibility to loans with the whole sanction process being completed in just forty-five minutes.
What’s New
With the launch of the new product, SME Digital Business Loans, the need for conventional credit underwriting and lengthy appraisal has been eliminated, according to the bank statement. This makes the lending process simpler, quicker, and more accessible.
Additionally, for loans with an upper limit of up to ₹50 lakhs, the bank has eliminated the need for any kind of financial statements. Rather, they aim to use their transaction details and GST returns.
The new product collects its data from varied sources like GST returns, ITR, bank statements, and much more. In addition to this, the bank has also created a credit-assessment engine of their own, that uses the data and makes lending decisions in just ten seconds.
Intending to increase SME’s accessibility to credit, these products are going to be available at all bank channels, like their website, bank branches, QR codes at outdoor touchpoints, and partner customer service point touchpoints.
More Like This
In addition to SME Digital Business Loans, the SBI has launched a variety of other products and schemes showcasing their intent to make MSME loan as their focal point. Earlier this year, the bank launched MSME Sahaj. Here are some of the most notable SBI products for MSMEs you want to know about.
MSME Sahaj
MSME Sahaj was launched to help SMEs with their working capital requirements. The unique solution offers short-term credit facilities against fast and easy invoice financing.
The unique product can be used to avail loans of up to ₹1 lakhs, with the whole sanction process being completed in just 15 minutes. The loan feature is available on the YONO SBI app.
With MSME Sahaj, the bank has made it easier, quicker, and digital for MSMEs to apply and get their credit requirements sorted.
SME E-Smart Score
With facilities of term loans and cash credit, SME E-Smart Score was launched for loans ranging between ₹10 lakhs to ₹5 crores.
These are designed for individually managed partnership or proprietary firms or private and public limited companies in the trading and industrial sector of SMEs.
To be eligible for these loans, the chief executive shall be no less than 18 years old and no more than 65 years old. Additionally, it’s mandatory for them to have a minimum overall score of 60% with at least 50% for each subhead, like business information, personal details, etc.
MSME UDAAN
MSME UDAAN was launched to offer financial support to startups in MSMEs. Here, the loans can be sanctioned for different needs like product development, website creation, raw materials and equipment, marketing and sales, and so on.
The scheme offered features like working capital and term loans with a loan amount of up to ₹50 crores.
To avail of these loans, the MSMEs shall be registered with a valid Udyam certificate. Further, they shall also be recognised by the DPIIT or Department for Promotion of Industry and Internal Trade, Government of India.
Wrapping It Up
The growth of MSMEs is significant for the overall growth and development of the economy. With the same view, the government of India and financial institutions have been launching a variety of products to help MSMEs have easy access to credit. Further, digital solutions like SME Digital Business Loans, MSME Sahaj, etc., ensure greater accessibility. These products are specially designed to help SMEs expand, leading to the ultimate development of the economy.