In another boost for the digital credit ecosystem, small merchants and MSMEs will be able to get instant working capital loans from banks using their Goods and Services Tax (GST) profile with an app developed by a start-up company based in Ahmedabad.
Developed by digital credit platform provider Online PSB Loans (OPL), the GST Sahay app will enable owners of small shops, kirana/grocery stores and other micro, small and medium-sized enterprises (MSMEs) to obtain instant bank loans between ₹10,000 and ₹2 lakh.
Notably, the OPL infrastructure was also deployed for the launch of the Reserve Bank of India (RBI) Innovation Hub pilot at GST Sahay.
Updating details
“Traders or shop owners will need to update their details such as GST profiles with generated invoices etc. in the GST Sahay app and they will be able to apply for loans from their bank. Based on your GST profile and KYC, the bank can approve the loan instantly. This will meet any short-term financing requirements for these small merchants,” said Jinand Shah, MD and CEO, Online PSB Loans.
More than Rs 1.2 crores of GST filing MSMEs and small traders will benefit from this GST Sahay app.
“The interest rate for such loans would be 8 to 12 percent, depending on the bank. SIDBI is currently testing this application for its clients. We expect a launch in the first quarter of this fiscal year,” Shah said, adding that this is the first product of its kind in the country that allows instant short-term credit for MSMEs using their GST profiles.
Launched in 2018, the OPL platform has a majority stake of 10 financial institutions, including private and public sector banks and other development lenders, who are also among a large client base that includes financial institutions.
End-to-end digitization
Apart from MSMEs, OPL’s digital lending platform is also being used for end-to-end digitization of Kisan Credit Card (KCC) in Karnataka, where State Bank of India (SBI), Bank of Baroda (BOB) and Punjab National Bank (PNB) are using this platform to extend credit to farmers. This has reduced the duration of available credit from 3-4 weeks to around 5-10 minutes.
In his recent visit to Ahmedabad, MK Jain, the RBI Deputy Governor shared the encouraging results of the pilot project and underscored the banking regulator’s intention to expand such platforms to “all types of credit, particularly for the bottom of the pyramid in society.” “.
‘Pioneering platform’
“PSBLoansin59minutes.com is a pioneering OPL platform designed for credit automation for borrowers. We are India’s largest online lending platform assigned to all current lending processes regardless of the type of bank or lending institution. Over the past five years, we have processed loan applications worth more than Rs 1,300 crore, of which disbursements were Rs 72,000 crore. In total, we have processed more than 7 lakh applications in this period,” said Ronak Shah, co-founder and COO of OPL.
For OPL, revenue comes from the one-time loan application processing fee. Revenue has grown about 25 percent year-over-year for the past three years, but it expects to break even this fiscal year.