emerges largest fintech lending platform

•, launched by Prime Minister Narendra Modi three months ago, has emerged as the country’s largest online lending platform, with loan sanctions exceeding over Rs 35,000 crore.

• The portal was launched in November to provide credit of up to Rs 1 crore to micro, small and medium enterprises (MSMEs) in just 59 minutes or less than an hour, in a bid to make banking transparent and hassle-free.

About the portal

• The platform, designed under the guidance of Financial Services Secretary, Rajiv Kumar, has reduced the turnaround time from 20-25 days to 59 minutes. Upon approval, the loan is disbursed in 7-8 working days.

• The secretary said the automated loan processing system has not only brought in ease, but is also helping in fostering transparency.

• It has put an end to discretion at the bankers’ end, as in-principle approval of loans does not require human intervention, Kumar said.

• “Due to the linking of data points, no one can game the system now. There is no scope for information asymmetry. It will also end the era of giving false information, such as a different income statement to banks and tax authorities,” he said.

• Since the launch, 1.62 lakh MSME units have been given in-principle approvals, while 1.12 lakh have got a final nod.

• Of this, 35,517 units have got new loans worth Rs 10,047 crore, while 77,369 units have received renewal loans of Rs 25,609 crore, according to the latest figures.

• MSME units availing of the loans have to submit details such as income-tax returns, GST data and bank statements to avail of credit facility through this portal.

Highlights of the report

• According to a report by global financial firm, Credit Suisse, the recently (November 2018) launched fintech portal, has, within three months, emerged as the largest online lending platform.

• The quantum of loan processing through this portal is much larger than the Rs 6,500 crore of cumulative disbursements by two of the largest online SME lending NBFCs over the past three years, it said, adding that the average ticket size (ATS) for new borrowers is Rs 27 lakh and Rs 34 lakh for repeat borrowers.

• The report further said SMEs apply for loans using their GST registration as the portal is integrated with GST server at the back-end as well as IT, credit bureaus and banks.

• It is able to quickly score the applicant on individual models of lenders (currently only PSU banks, but private banks/NBFCs are also signing-up).

• Borrowers then select the lender and branch from the banks willing to grant “in-principle” approval.

• This approval is presented at the branch, and after the documentation process, the sanctioned loan is disbursed.


Mains Paper 3: Indian Economy | Planning, mobilization of resources, growth, development and employment

Prelims level: About the Portal

Mains level: Facilitating MSMEs in India

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