FE Exclusive: SIDBI to Launch GST Sahay Invoice Finance App for MSMEs, Opens to Banks and NBFCs
Credit and financing for MSMEs: The Small Industries Development Bank of India (SIDBI), the leading financial institution for the MSME sector, has invited banks and NBFCs to test its on-bill finance app GST Sahay, a source familiar with the developments said.
Currently, SIDBI is testing the GST Sahay platform with its own members and also on the RBI Sandbox, a controlled environment for testing financial products. Thirteen transactions with its customers have already taken place on the application.
On Thursday, SIDBI presented GST Sahay’s proof of concept to selected private and public sector banks and NBFCs in a meeting. Senior executives from the technology think tank iSPIRT Foundation and the digital lending arm of SIDBI Online PSB Loans (OPL) were also present. “The reason for the meeting was to present the proof of concept to the banks so they could further develop the app for their own customers,” the source said.
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GST Sahay will be an invoice financing marketplace where MSMEs can use their unpaid invoices to quickly obtain working capital loans. The loan amount would depend on the invoice value which could start from Rs 10,000 and could go up to Rs 3 lakhs.
Although there is a central GST Sahay application, banks can use the digital infrastructure and create products on top of it for their customers. “We expect faster adoption of NBFCs as banks are still used to offering cash credit limits to their customers and may take time to adjust to invoice financing,” the source said.
Market launch will take another 5-6 months as the current plan is to let the lenders work on it and grow it organically with their customer base.
In a recent session with MSME members of industry association PHD Chamber of Commerce and Industry, Sivasubramanian Rammann, President and CEO of SIBDI, said on GST Sahay: bank turnover can be as high as 16-18 percent. The market model will be at the heart of the bill finance platform so that MSMEs can accept the most competitive offer.”
At the heart of the application would be the central database hosted by SIDBI where information on all MSME invoices will be stored. This will be the central link for all lenders to populate information and also access invoice status information.
The database will also be linked to the Goods and Services Tax Network (GSTN) and to banks through the Account Aggregator Network. This will give the lending institution an idea of what this entity looks like. The lender can do their analyzes on the regularity of the company’s payments or the stability of the company and have a clear view of the relationship between the company and its various vendors and suppliers, Rammann said.