Tag: MSMEs

TIDE’s Global CEO Oliver Prill foresees India as largest growth market

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Oliver Prill, the global CEO of business financial company TIDE, highlighted the significant opportunity in India’s SME market, attributing it to the digitisation and formalisation efforts driven by Aadhaar and UPI. Tide is a nine-year-old startup, headquartered in London, offering mobile-first banking services for small businesses. In an interview with CNBC-TV18, Prill expressed confidence in India becoming TIDE’s largest growth market.

TIDE, which made its foray into the Indian market in 2021, has made remarkable progress, with membership from Micro, Small, and Medium Enterprises (MSMEs) skyrocketing in the past two years.

Currently boasting a membership base of 2,25,000 MSMEs in India, TIDE is poised to reach the half-million mark by the year’s end. Prill emphasised the company’s commitment to empowering small businesses, particularly in tier 2 and 3 towns across India, where 90% of TIDE’s members are located.

Prill highlighted India’s evolving business landscape, noting the increasing formalisation aided by government initiatives like UPI and Aadhaar. TIDE has pledged over 100 million pounds in investments, recognising India’s immense potential within the global MSME market, estimated to be around 9–10%.

Prill underlined the TIDE’s role in catalysing the formalisation process, anticipating MSMEs to constitute a significant portion of India’s total population in the coming years.

Furthermore, TIDE’s recent report revealed that 78% of women entrepreneurs in India receive crucial support from their families, showcasing the untapped potential of female entrepreneurship in the country.

With plans to support half a million women entrepreneurs and the recent launch of credit services in India mirroring its UK operations, TIDE is primed to capitalize on India’s burgeoning market. Prill also highlighted the potential for the India-UK Free Trade Agreement to strengthen ties between the two countries, further solidifying India’s position as TIDE’s primary growth frontier.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Timely payment to MSMEs rule to be enforced from April 1: Finmin officials

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The government will implement a rule in FY25 requiring payments to micro, small and medium enterprises (MSMEs) to be made within 45 days, failing which companies will have to pay tax on the amount due.

Any change to the rule is possible only in the Union Budget in July, two senior finance ministry officials said. The government is not looking at deferring the rule by one year, as sought by traders, they said.

“According to the Finance Act 2023, companies need to make payments to the MSME sector within 45 days, which is slated to come into effect from April 1, 2024, else the companies cannot claim deductions on it,” a senior finance ministry official told Moneycontrol.

The Finance Act, 2023, introduced Section 43B (h) in the Income Tax Act to ensure timely payments are made to MSMEs and to maintain uninterrupted cash flow. If companies fail to make payments within 45 days, the amount will be added to their profit on which tax will have to be paid.

Parliament has already approved the amendment. The new rule implies that an employer, including a company, can claim a deduction for tax, duty, cess, or fee payable to the government only when it is actually paid, regardless of when it is accrued or incurred.

“The provision ensures that businesses fulfil their tax obligations promptly, rather than defer payments indefinitely for tax benefits,” the second finance ministry official told Moneycontrol.

No change possible

Any change to the rule can be made only in the next budget in July, the official said, adding that no change is possible before that because it has to be approved by parliament.

“Even an ordinance route is not feasible as parliament will not be in session to approve it till July,” the official added.

The Confederation of All India Traders (CAIT) had sought postponement of the rule by a year, citing lack of clarity. CAIT secretary general Praveen Khandelwal said there is a need for greater awareness among traders nationwide about this provision.

MSMEs face mounting challenges due to delayed payments from public and private entities. Small businesses often operate on tight margins and payment delays disrupt their cash flow and hinder their operational capabilities.

From manufacturers to service providers, the ripple effects of delayed payments are felt throughout the MSME ecosystem. The income tax amendment aims at addressing the issue.

As per the Micro, Small and Medium Enterprises Development (MSMED) Act, 2006, the buyer is required to make payment to the MSME supplier within 45 days of the acceptance of goods or services rendered. Finance minister Nirmala Sitharaman has raised the issue several times after the pandemic and has asked businesses to make timely payments.

“It’s a good thing – extra teeth given by the new rule is good. This should be implemented stringently. There may be some hurt, but awareness was there. There could be loss of business. The new rule should continue and be enforced,” Ashok Saigal, co-chairman of the Confederation of Indian Industry MSME Council, told Moneycontrol.

He said the issue may be more of access to finance for buyers or a finance credit gap.

“It will be the cost of tax versus the cost of additional borrowing. If the buyer has been operating and has good credibility, it should not be difficult for him to get the finance. Businesses should find a way to get finance within 45 days to make payments to MSMEs.” Saigal said.

Additionally, the government has implemented measures to ensure compliance with these payment terms, such as the Trade Receivables Discounting System (TReDS), which helps MSMEs receive payments promptly by facilitating the discounting of their invoices.

The TReDS platform enables discounting of invoices/bills of exchange of MSME sellers against large companies, including government departments and public sector undertakings, through an auction mechanism to ensure prompt receivables at competitive market rates.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

UDYAM-registered micro businesses double in FY22 vs FY20: Report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Five in every 100 businesses are micro businesses, as per a MSME report by U GRO Capital and Dun & Bradstreet.  94% of these micro-enterprises operate in an unorganised manner, the report added. Also, there has been a 2.2x rise in micro businesses registered with UDYAM from FY2020 to FY2022. However, there has been a dip in the same period for both small and medium businesses. 

The report stated that micro-enterprise registrations saw the highest increase (FY22 over FY20) in Himachal Pradesh, while small firms exhibited this trend in Bihar and medium firms in Jharkhand. Other states that have seen a rise in micro businesses are Madhya Pradesh, Bihar, Uttarakhand and Haryana. 

According to a survey, which was part of this report, there was a drop in gold loans and a higher proportion of term loans among the 10,000 micro businesses that were surveyed. This means that there has been ‘a gradual journey into the fold of mainstream lending.’

It also highlighted that the ticket size of loans to micro and small enterprises has increased while it has dipped for medium firms in 2023 in comparison to 2022. In terms of challenges, as compared to medium enterprises, micro businesses have witnessed a rise in the delay of payments from July 2022 to June 2023.

In the case of small businesses, the report stated that optimism amongst small businesses for demand and profitability has spiked in Q3 2023. Moreover, small businesses are also highly optimistic about capital investments, “despite the rising lending rates and hiring employees, which bodes well for the overall growth momentum.” Small businesses are gearing up for growth in response to robust domestic demand.

Understanding the needs of MSMEs will be crucial to achieving a growth rate of 7.2% in FY23. “A robust MSME activity will be pivotal to India’s growth story. The noteworthy increase in the contribution of MSMEs to India’s Gross Value Added (GVA) from FY21 to FY22 signifies a substantial rebound for these businesses from the pandemic,” as stated in the report.

The report on the global economy said that 2024 will witness a mild slowdown amid weak external trade.

Since its inception in 2020, MSME registrations on UDYAM have increased by 2.4 times, while they have generated 1.6 times more employment opportunities in FY23. Maharashtra, Tamil Nadu and Uttar Pradesh have the largest registrations of MSMEs amongst the states and also have the largest share of employment generated. However, states like Karnataka, Madhya Pradesh, Telangana, and Andhra Pradesh have a disproportionate share. 

Avinash Gupta, MD & CEO-India, Dun & Bradstreet, said, “India aims to be a $30 trillion economy by 2047, roughly an 8x increase in two decades. MSMEs contribute nearly a third of India’s GDP. It is imperative that MSMEs scale up significantly and quickly, necessitating an estimated $11.5 trillion financing requirement in fixed assets.” 

“We have observed that the business optimism of MSMEs has soared to the highest level since 2022, indicating improvement in performance even in the face of a difficult external environment. Moderate delinquency rates and low sector risks have also improved MSMEs borrowing prospects. The government’s continued thrust on formalization is furthering the formal credit penetration in the sector,” he added.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Budget 2024: Exporters, industry expect measures to increase India’s global competitiveness

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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With around a week to the interim budget, industry experts from various sectors anticipate inclusive development, infrastructural expansion, digital payments, green projects, and self-reliance will continue to get a push. Exporters and industries seek more measures to increase India’s global competitiveness and are calling it the manufacturing moment. 

Bharat Dhawan, Managing Partner, Mazars in India, predicts that capital expenditure will continue to remain strong, with further allocations in the construction of roads and railways taking center stage.

Dhawan says, “High hopes are pinned towards green hydrogen in the energy sector, as well as for championing the production of EVs in automotive. The agricultural sector can also expect sops in view of current climate and inflationary pressures, and the government may take steps to cut domestic prices and boost insurance.”

Dhiraj Relli, MD & CEO, HDFC Securities reckons that the major policy reforms and announcements may get postponed to the regular budget due in June/July 2024, even as there would be some buildup of expectations ahead of the vote on account.

Relli emphasised that the capex and fiscal consolidation paths followed in the vote on account would be closely monitored given their impact on growth and interest rates. The government will have to maintain a balance between the capex and fiscal consolidation, as a higher capex could postpone the journey of the latter. 

“The government is likely to stay on the fiscal course-correction glide path in the interim budget for FY25, shunning populist spending or incentives ahead of the summer general election,” said Relli.

Some SOPs for women and youth could be announced with minimal impact on the deficit after SOPs for the poor and farmers have been announced time and again. Relli expects the capital markets to get a little excited by the vote of accounts, however, the market may wait for the regular budget and the general election outcome before getting very bullish.

Sujit Bangar, CEO at Tax Buddy, pointed out that the government has been trying to simplify tax compliance as two tax regimes have created confusion amongst taxpayers. The upcoming budget should amalgamate into one tax regime through the overall rationalisation of tax rates.

Amrit Acharya, CEO and co-founder at Zetwerk, called the present day the manufacturing moment of India, which needs to be seized with a vision of the next 25 years. 

The economy must look beyond ‘Make in India‘ and forge a self-reliant ecosystem through R&D investment, cutting-edge clean technologies, and robust skilling programs. Acharya has suggested that the government must bridge the gap between established manufacturers and new-age companies through a level playing field.

India must bridge the gap between established manufacturers and new-age companies through a level playing field to explore its full potential, Acharya added. 

Akihiro Ueda, CEO of Terra Charge, looked optimistic that the government will continue to support the EV ecosystem through favorable policies, subsidies, and infrastructure development. This will also prove significant for India’s environmental goals. The EV industry has received a significant boost through initiatives like the production-linked incentives (PLI) scheme.

Akash Sinha, CEO and Co-Founder, Cashfree Payments, stressed that the government should push for initiatives that aim to focus on increasing penetration of digital payments in regions in tier-2 cities and beyond.

“There is a call for the implementation of a standardized KYC framework across all financial services, aiming to enhance efficiency and promote financial inclusion in a secure way. Overall, the budget should also announce some provisions to ease the financial burden on fintechs and provide tax-saving benefits to startups in the sector,” said Sinha.

MobiKwik’s co-founder and CEO, Bipin Preet Singh, suggests that we could foresee incentives for fintechs that provide lending solutions beyond Tier 2 and Tier 3 cities.

Singh believes that the upcoming Union Budget will further drive financial inclusion by increasing the credit corpus for MSMEs, which includes extending support to microfinance institutions (MFIs) and small finance banks (SFBs).

“We expect the budget to provide incentives that encourage fintechs to drive further innovations in other aspects of banking like credit, investments, savings, and advisory. We also expect digital lending, especially  small-ticket loans, to grow significantly with the proper checks and balances in place to protect borrowers,” said Singh.

Vikram Agarwal, Managing Director, Greendot Health Foods Pvt. Ltd, the company that owns the popular Nachos brand, has requested the government allocate funds for export incentive schemes in the food sector, coupled with subsidies to facilitate overseas participation in major food shows.

Apparel Export Industry 

The Apparel Export Promotion Council (AEPC) has pitched to enhance the competitiveness of RMG exports in India. Mithileshwar Thakur, Secretary General, AEPC, said, “India is on the cusp of being the fastest-growing economy, and trimmings and embellishments under the Import of Goods at Concessional Rates of Duty Rules (IGCR Rules) will help the sector.”

The operations involved in the garment export trade require various kinds of quality trimmings and embellishments (tags, labels, stickers, belts, buttons, linings, inter-linings, etc.) to ensure the desired functionality and aesthetics of garments in the global market. In order to maintain their brand image, foreign buyers insist on maintaining consistency and quality and avoiding the use of counterfeits. APEC has also requested duty exemption for the following items: draw cord, elastic band or tape, metal tabor stopper or clip, tape, velcro tape, leather badge, die set, D ring, etc.

Also, the sector should be allowed a minimum waste at 10% under the IGCR Rules for import of trimmings and accessories by issuing an appropriate notification. “Apart from this, an increase in the rates to 5% for All Exporters under the Interest Equalization Scheme will boost the sector. The industry has requested the government to consider tax concessions to apparel manufacturers adopting ESG and other international quality standards and compliances,” Thakur added.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

90% of MSMEs confident about India’s economic resilience; expect profit boost in 2024: NeoGrowth study

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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According to NeoGrowth’s latest ‘MSME Business Confidence Study’ for 2024, a staggering 90% of micro, small, and medium enterprises (MSMEs) expressed confidence in India’s economy, projecting resilience or improvement in the coming year.

Released on Wednesday (January 10), the study analyses responses from nearly 3,000 MSMEs across 25+ top cities in India, highlighting the continued confidence of small businesses in India’s economy, their preparedness to meet consumer demand, and the strategies they planned to implement in 2024 to drive business growth.

The study reveals that 91% of MSMEs anticipate increased profits in 2024, driven by government initiatives and a robust economy. Over 40% of MSMEs benefited from government schemes in 2023, with the manufacturing and wholesale sectors emerging as primary beneficiaries.

Notably, 82% of MSMEs are gearing up for a digital revolution in 2024, planning to leverage online tools for various aspects, including selling, delivery partnerships, cashless payments, streamlined operations, and enhanced customer engagement.

Also Read: Cyclone Michaung Impact: MSME sector may have suffered losses greater than ₹3,000 crore

Consumer demand remains a key focus, with 75% of wholesale and trader segment MSMEs bullish on consumer spending in 2024. The study highlights that Delhi leads in optimism, with 87% of surveyed MSMEs anticipating a surge in consumer spending, followed by Bengaluru and Pune.

The positive sentiment extends to hiring plans, with 44% of MSMEs planning to hire more employees in 2024. Bengaluru and Pune emerge as hubs of maximum hiring activity, with a focus on creating opportunities for people with disabilities, hiring from smaller towns, and increasing the share of women in the workforce.

Further, 60% of MSMEs plan to open new stores and offer new products or services to their customers in 2024. MSMEs in Bengaluru, Delhi, and Pune have shown a willingness to expand their presence in 2024. The highest number of MSMEs in the wholesale/trading sector expects business and store expansion in 2024.

Also Read: Amazon inks pact with India Post to ease cross-border logistics for MSMEs

Around 81% of MSMEs plan to adopt sustainable and eco-friendly practices in 2024. Similar to 2023, MSMEs have rated ‘going plastic-free’ as a key environment-friendly initiative of their business for 2024.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India achieves a new milestone in financial inclusion and credit growth

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Expanding credit access remains a key lever of growth in India, as emerging technologies allow lenders to assess and meet the financial needs of consumers in newer and more efficient ways. The transformative impact of these developments and the changing face of mainstream credit were encapsulated by the landmark CNBC-TV18 & Lentra present Digital Lending Summit, held on December 13 in Mumbai. It gave audiences an in-depth look at the people, processes, and principles that are shaping digital lending in India, growing at an annualised rate of 9% over the past five years and exemplified by the rise of Lentra and its suite of 3,600 fully-integrated digital lending SaaS solutions, which serve 45 financial institutions and process 2 million loan applications every month.

Unlocking India’s Economic Potential: Addressing the Credit Gap for Sustainable Growth

On the cusp of becoming the world’s third-largest economy, India showcases an inspiring growth trajectory. The backbone of this advancement rests on the robust expansion of the micro, small, and medium enterprises (MSME) sector, currently comprising around 63.4 million units. However, amidst this promising narrative lies a crucial hurdle – the restricted access to formal credit. Domestic credit to India’s private sector remains at 55% of its GDP, significantly trailing behind the global average of 148%. This shortfall places India behind its economically thriving Asian counterparts like China, South Korea, and Vietnam. Bridging this credit gap becomes pivotal for sustaining and amplifying India’s growth story.

Bearing the theme ‘Enabling Economic Growth For All: Bridging The Credit Gap’, the Digital Lending Summit saw banking and financial sector leaders clearly establish what’s at stake. “Leveraging GenAI and predictive AI would unlock unparalleled efficiency”, said Sreyssha George, Managing Director & Partner, BCG, during a presentation which preceded her fireside chat with D Venkatesh, CEO Lentra. Ratan Kesh, Executive Director & COO of Bandhan Bank, believed that “it’s not about financial inclusion anymore, it’s more about financial empowerment” when speaking about the core objectives of expanding credit.

Inclusion was a pertinent theme in the keynote by Mr Jayant Kumar Dash, Executive Director, RBI, who pinpointed ‘access, usage and quality’ as the foundation of credit inclusion. These ideals are reflected in India’s world-class free-to-use public digital infrastructure, which has given fintech innovation a boost and was cited by both D Venkatesh and Dinesh Khara, Chairman, SBI, as a chief facilitator of financial inclusion during their fireside chat and special address, respectively. As the leaders looked ahead, the possibilities truly seemed limitless. “We talk about Instagram being one of the most popular apps. Why can’t digital lending be as popular as that?” asked Arvind Vohra, Group Head – Retail Assets, HDFC Bank. The good news is digital lending seems to be on the right course to scale up, as Karthik Srinivasan, Chief Business Officer, HDB Financial Services, noted. “There is a convergence between what we want and what customers want”.

In the panel themed, “Beyond Banking: NBFCs & Tech-Enabled Credit Inclusion, Ramesh Iyer, Managing Director, Mahindra Finance, spoke about going digital. He said – “it’s not only about lending, it’s also the ability to get back the money. There will always be caution on how to lend & still recover, and which is why you will find this goes a little slow. Now, with the coming of digital means and supported by an ability to underwrite data, that number is increasing, and that’s where we see financial inclusion at a much faster pace.”

Reimagining Lending Using AI: Lentra’s Role in MSMEs, Data-Driven Lending and Credit

In a conversation with Ankur Handa and Rangarajan Vasudevan from Lentra, introduced the audience to India’s first and one of its kind, “Lentra Intelligent Lending Cloud,” which is a supercharged upgrade of the Lentra platform, blending innovation and intelligence with generative AI to make lending a more personalised experience for everyone.

One of its shining features is the Lentra Convo – a multilingual digital assistant that works its magic using natural language, guiding users through the lending journey seamlessly. This is anticipated to serve as a wonder tool for individuals looking for digital lending options for their start-ups, furthering the economic growth in India. Since MSMEs contribute 30% to India’s GDP, they play a crucial role in employment.

These enterprises thrive in an environment fostering entrepreneurship and finance accessibility. Embracing digitisation and data-driven lending is now crucial. This approach minimises risks, gauges loan repayment probabilities, and enables optimised customer strategies, driving growth in the credit card sector. Anupam Mishra, Director, AWS, spoke about the potential of generative AI & machine learning in the coming years and how it can transform industries. He further explained how more & more individuals are leveraging digital tools for managing personal finance.

Lentra has emerged as a trailblazer in digital lending. It stands proudly as an end-to-end cloud lending platform democratising Digital lending through its secure and scalable SaaS platform serving over 45 financial institutions. Rajnish Khare, Chief Digital Officer, Union Bank of India, expressed in a conversation while explaining the efficiency of Lentra as a platform, easy customisation and reasonable costs, “Lentra to us has been a very reliable partner with an excellent technology stack. The relationship management has been great from Lentra’s side. I have not seen many companies proactively approaching customers & understanding their business.”

In another conversation with Lentra Santanu Basu, Head SME, Aditya Birla Finance highlighted the evolution of the whole space of digital lending or digitised processes. Pankaj Poddar, Chief Risk Officer, SBFC India added, “If you have to give loans in more than 100 or 200 towns across 16 states, it is not possible to do that manually, so you need a workflow, ENT engine for you to back it.”

Sumant Rampal, Country Head (BBG, RBG, SLI), HDFC Bank, gave a detailed overview of the scope of MSME & agri-lending in India, as he conveyed – “I think fundamentally in the last decade or so, the biggest change which happened is that whether it’s a micro-unit or a medium-sized entity or a farmer, there is a lot of data which is flowing into banks there is a lot of information which is flowing to institutions and I think that has become the most powerful tool available in making sure that the end consumer gets the benefit of it.”

Digital Lending Pioneer Awards: A Celebration of Innovation & Insights With The Leaders

If the morning session gave audiences a chance to hear from leaders on overarching themes of inclusion and technology, the post-lunch session allowed them to pick and choose from a series of simultaneous breakout sessions, covering topics ranging from ‘Navigating the Evolving Landscape of MSME’ to ‘Data-driven Decision Making in Lending’ and ‘Strategies for Credit Card Growth: Enhancing Acquisitions, Conversions, and Usage’. But the highlight of the evening session was the Recognition Ceremony to felicitate pioneers of digital lending who have distinguished themselves through innovative products and services.

Before that, audiences were treated to illuminate insights from two globally reputed personalities. Cyrus Daruwala, MD – Global Financial Services, IDC, delivered an uplifting verdict on the ‘India Growth Story 2024’. Then, renowned South African cricketer Jonty Rhodes spoke to Anand Narsimhan, Managing Editor – Special Projects, CNN-News18, about preparing for success. Jonty Rhodes also handed out mementoes of recognition to the felicitated lenders, which included TVS Credit Services for Excellence in Digital Distribution, HDFC Bank for Excellence in Digital Lending, IndusInd Bank for Excellence in Digital Lending Growth, Tata Motors Finance for Excellence in Auto Finance, and Avanse Financial for Excellence in Education Financing.

Bridging India’s Credit Gap: Enabling Economic Growth and Financial Inclusion

The Digital Lending Summit showcased how ingenuity and ideas are seeking to keep pace with the India growth story, bolstered by innovations like the Lentra Intelligent Lending Cloud, a bundle of novel AI use cases that was launched at the event and promises to make lending smarter and more intuitive. It brought together banks, NBFCs, and technology leaders to become partners in the future growth of the digital lending ecosystem, sharing insights and seeking the same solutions. The true impact of the Digital Lending Summit was perfectly summed up by Ashwini Kumar Tewari, Managing Director, SBI, when he said, “Lending has just taken off, and this entire summit on digital is also a kind of inclusion.”

Note: This is a partnered post.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Empowering growth for all by bridging the credit gap

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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India is expected to become the world’s third-largest economy by FY 2028, with a projected GDP of $5.2 trillion, surpassing Japan and Germany. This growth is primarily due to the remarkable expansion of the micro, small, and medium enterprises (MSME) sector, which currently consists of approximately 63.4 million MSMEs. However, despite this impressive economic narrative, India faces a significant challenge – constrained access to formal credit.

The credit gap in the MSME sector alone in India amounts to a staggering ₹25 trillion, with less than 10% of the Indian population having access to formal credit. This leaves over a billion individuals excluded from the financial mainstream and the overall debt demand from MSMEs in the country amounting to ₹69.3 trillion.

The World Bank data highlights that India’s domestic credit to the private sector is only 55% of its GDP, significantly lower than the global average of 148%. India also lags behind economically robust Asian nations such as China, South Korea and Vietnam.

As India strives towards economic pre-eminence, it is crucial to address this credit gap to ensure sustained and inclusive growth. Enhancing access to formal credit, particularly within the MSME sector, is imperative to ensure the country’s economic resilience and prosperity.

Gaps in traditional lending

The conventional process of accessing credit, primarily through banks or financial institutions, has long been characterised by the submission of paperwork and a subsequent waiting period for a decision. However, this process poses a formidable challenge, particularly for individuals with limited credit history or unconventional financial circumstances, as it heavily depends on credit scores and historical data. Consequently, it potentially leads to the exclusion of certain applicants, which is accentuated for customers who are new to credit and lack a substantial credit history.

Traditional lending institutions’ sluggish adoption of digital reforms and essential technology is compounding this challenge. The hesitancy to embrace technological advancements increases operational costs and diminishes competitiveness for financial institutions. As a result, these institutions struggle to keep pace with the dynamic needs of customers and experience overall inefficiencies in the lending process.

Technology reshaping lending

The modern landscape of digital financial enablers is fundamentally reshaping credit accessibility, especially for segments historically underserved. These entities leverage digital onboarding, assimilating vast amounts of critical data for making credit decisions via API’s and technology-driven underwriting processes, ensuring precise risk assessments, swift loan approvals, efficient disbursements, and streamlined collections.

A prime example is Lentra, which strategically addresses industry challenges, enhancing credit accessibility through its comprehensive Intelligent Cloud lending platform. Lentra’s approach is distinguished by utilising cutting-edge technologies like open APIs and artificial intelligence (AI), enabling automated loan approvals. This expands the banks’ reach and enriches customer engagement while reducing operational costs. Serving over 50 banks and financial institutions in India and Southeast Asia, Lentra processes a substantial volume, having disbursed over $27 billion worth of loans and processing more than 2 million loan applications every month on Intelligent Lending cloud platform.

Crucially, the offerings of firms like Lentra extend beyond conventional creditworthiness assessments. They leverage advanced technologies to monitor loan repayments, eliminating biases in customer interactions and in the process democratising the credit ecosystem.

Lentra Digital Lending Summit 2023

To further showcase such digital tools and foster discussions on expanding credit access, Lentra is organising the Lentra Digital Lending Summit 2023 in association with CNBC-TV18 on December 13. This day-long event will bring together leaders from various financial institutions, fostering discussions on the impact of emerging technologies on lending processes and scalability. The summit represents a unique opportunity to mobilise India’s lending strength and instigate a concerted effort to transform how credit is sought and delivered. With captivating discussions, insightful interactions, and a felicitation ceremony on the agenda, the Lentra Digital Lending Summit 2023 is designed to become a vital cog in India’s economic machinery.

Note: This is a partnered post by Sandeep Mathur, Chief Revenue Officer at Lentra. The views or opinions mentioned in this article are not those of CNBC-TV18, or any of its affiliates.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

MSMEs’ Rise: Unveiling Meesho’s visionary goal of empowering 10 million small businesses by 2027

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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On World MSME Day 2023, News18 Network and Meesho unveiled “Mission To 100 Million.” This initiative celebrated the entrepreneurial spirit of MSMEs in India and guided them on adopting digital technologies. The goal was to unite entrepreneurs across scale, recognize their contributions and achievements, and help them navigate a changing business landscape.

Challenges in a changing landscape

India boasts over 12 million registered small businesses – a notable part of the economy. While they employ over 40% of the workforce coupled with exports, certain challenges still persist. With the government’s target of 50% GDP contribution by small sellers by 2025, enabling them to come online and succeed is the key.

The digital imperative

Recent reports suggest that 68% of Indian small businesses want to go digital. Yet, a significant 84% face difficulties due to lack of skills, funds, or access to digital experts.

Uniting minds

“Mission 100 Million” brought together leaders, policymakers, stakeholders, and regulators as they discussed practical strategies for small businesses to embrace digitalization, foster innovation, and overcome challenges.

The panel delved into the transition of MSMEs from conventional methods to digital commerce. Vidit Aatrey, Co-Founder and CEO at Meesho was joined by Praveen Khandelwal, National Secretary General of CAIT; Sameera Saurabh, Economic Advisor at the Ministry of MSME, GOI and Shireesh Joshi, Chief Business Officer at ONDC, engaging in defining the roadmap for India@100.

In another panel, the speakers discussed how logistics, payments, venture capital, and social media can boost MSME growth. Sandeep Barasia, Chief Business Officer at Delhivery; Vikas Purohit, Head SMB at META India; Mukul Arora, Co-Managing Partner at Elevation Capital and Leela Datwani, Financial Sector Specialist at CGAP, World Bank, shared insights on collectively creating a conducive and integrated ecosystem for MSMEs to join the e-commerce bandwagon.

Meesho aims to empower small businesses through seller onboarding

Vidit Aatrey, the Co-Founder and CEO at Meesho, highlighted the company’s bold ambition to bring 1 crore sellers onto its platform by 2027. This goal, which is ten times its current seller count of 13 lakhs, is aligned to the company’s mission to democratise internet commerce for everyone while supporting local businesses from the deepest corners of the country. Meesho is aimed to target the vast untapped potential in the MSME sector, which constitutes around 8.5 crore small businesses, with only 15 lakhs operating online. This move is especially significant given the hurdles many new sellers face during GST registration.

“The rise in online shoppers, now tenfold from before, indicates a promising and mushrooming digital sentiment. Better internet, innovations like ONDC, and soon non-GST sellers being able to digitise their businesses signify bigger opportunities. We have 1.3 million sellers on our platform, compared to a fraction of GST-registered businesses. This progress ushers in digital empowerment of the entire MSME community who forms the backbone of the Indian economy.” – Vidit Aatrey

Enabling digitalization for small businesses: Confederation’s efforts

Praveen Khandelwal, addressing the need for digitalization, highlighted that approximately 80 million small businesses in India, with an annual business of around 140 lakh crores, should adopt digital practices. The Confederation of All India Traders, along with its widespread network of 40,000 trade federations, has been committed to this cause.

Their focus on interaction, technology, communication, logistics, and networking encourages businesses to have an online presence alongside physical stores, benefiting both local communities and the national economy. Despite challenges like rapid transformation and financial inclusion, the potential for small businesses to adapt is enormous.

“Discussing Artificial Intelligence and Machine Learning, it’s clear that the future will heavily involve these technologies. So, if we genuinely want to help small businesses, we should incorporate Artificial Intelligence and Machine Learning while educating and equipping the small sellers with the deployment of such tools. This story centres around the process of bringing MSMEs into the digital world,” Praveen added.

ONDC: Building a diverse digital commerce network

The Open Network for Digital Commerce (ONDC) aimed to establish a unified digital platform for the entire commerce ecosystem. According to Shireesh Joshi, ONDC is not about creating a standardised experience. Instead, it forms a network that brings together platforms connecting sellers and buyers. This approach is similar to the internet, where individual websites provide unique experiences. ONDC allows various platforms to connect, each tailoring its own experience for its users. This customization encourages diverse trade possibilities. The network already encompasses various categories such as food products, fashion, electronics, agriculture, and more.

Challenges and inclusion in building a digital ecosystem for MSMEs

Sandeep Barasia addressed the challenges in establishing a digitally powered integrated ecosystem for MSMEs. He highlighted the five major obstacles faced by MSMEs, starting with the difficulty of sourcing goods due to their low scale. High business costs and limited market access also posed severe challenges.

According to him, for the benefits of such an ecosystem to reach remote and marginalised MSMEs, the use of vernacular languages is pertinent.

“I believe vernacular has a pivotal role to play. Developments have occurred in English, which have yielded decent results so far. However, the challenge lies in replicating this success in languages like Telugu, Bengali, Marathi, and others. It’s imperative that we take this to the grassroots, truly embracing vernacular. This stands as a vital and recurring concern – vernacular holds the key indeed, it is an integral part of the solution.” – Sandeep Barasia

Mukul Arora highlighted another prime issue of credit and capital availability to SMEs. He spoke about how initiatives like the Open Credit Enablement Network under India Stack and uniting SMEs, credit providers, and technology suppliers on a common platform with shared APIs, can substantially reduce operational expenses and grant easier access to the much-needed capital.

Challenges Faced by MSMEs in India: Credit gap, digital literacy, and human capital

Leena Datwani highlighted a huge credit gap of 530 million in the Indian MSME industry. A striking 80% of these businesses expressed their inability to access formal financial resources. For women entrepreneurs, this challenge escalated to 90%. This posed a serious obstacle to address. Alongside the constraints of financial access, there were concerns about limited digital literacy and availability of technology.

As the sector surged ahead, the journey towards digital transformation took on an ever-more important role. In the pursuit of a self-reliant India and the realisation of ‘Mission to 100 Million’, the collaboration between News18 Network and Meesho set the stage for a future where Indian MSMEs stand empowered, resilient, and poised to conquer the challenges of a constantly evolving business world. This milestone not only celebrated the inspirational journeys of the Indian MSME sector but also paved a well-charted path for its growth, innovation, and competitiveness.

Note: This is a partnered post

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Economic slowdowns in US, Europe may affect 40% of India’s exports

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Micro, small and medium enterprises (MSMEs), accounting for about 40 percent of India’s exports, is expected to face headwinds from the imminent economic slowdown in advanced countries, particularly the US and Eurozone as these two geographies account for a large chunk of India’s overall exports- nearly one-third.

Resultantly, one out of five MSMEs are expected to see a stretch in its working capital days. These MSMEs are in sectors already grappling with high working capital requirements.

The Ahmedabad cluster has a major presence of MSMEs into dyes and pigments, pesticides, and pharmaceuticals. The working capital stretch is expected due to an inventory pile-up following dumping by Chinese producers, the recent earthquake in Turkey and a slowdown in the US. These three account for 20-25 percent of the total exports of dyes and pigments, pesticides and pharmaceuticals, according to an analysis by CRISIL MI&A Research.

90 percent of India’s diamond exports emanate from Surat. Diamonds constitute more than half of India’s gems and jewellery exports and a substantial decline in demand from the US, the largest export market, is having a significant impact. That, in turn, is having a bearing on receivable days, leading to an increase in working capital days from about 140 prior to the pandemic to more than 200 this fiscal.

In the construction-roads sector, underachievement of budgeted capex last fiscal — to rein in fiscal deficit — has added to the challenges of developers in meeting working capital demand amid high commodity prices. This has led to an increase of more than 100 days in their working capital cycle this fiscal, compared with pre-pandemic levels.

Furthermore, the total debt requirement for the MSME sector is estimated at about Rs 100 lakh crore. However, not all of tis demand is addressable by the formal financial institutions, as some firms are either not commercially viable or voluntarily exclude themselves from formal financial services. The challenges to accessing capital include high credit risk, lack of collateral, regulatory barriers, etc. Hence with about 70 percent debt sourced from informal sources, the cost of capital is extremely high.

According to the RBI, about 80 percent of India’s MSME sector debt is in the high risk category and the non performing assets have increased substantially, which indicates a significant credit gap in the MSME sector hampering its growth and development.

Although, there has been progress in providing access to capital to MSMEs with the new initiatives like priority sector lending norms, cluster-based lending and government schemes. Albeit there is a need for more enabling policies and infrastructure to support the MSME sector and its financing needs.

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Experts discuss growth potential and key challenges for MSMEs

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The growth of any economy relies on the contribution of small, micro, and nano entrepreneurs. In the case of India, MSMEs play a crucial role, accounting for approximately 30 percent of the GDP and employing over 11 crore individuals. On the occasion of World MSME Day, Startup Street sheds light on nano entrepreneurs, whose annual turnover is below Rs 1 crore. Surprisingly, this group constitutes 80 percent of micro-entrepreneurs, yet there are no specific policies or available data tailored to their needs.

Geeta Goel, Managing Director of MSDF India, highlighted the potential of these enterprises during an interview with Startup Street. She emphasised that with the right credit support, these nano entrepreneurs have the ability to expand their operations and generate more employment opportunities.

“If given credit support, these enterprises actually have the ability to grow and employ more people. There is data to show that enterprises that start with investment capital of more than two and a half lakhs actually have a 3x higher survival rate than enterprises that start with lower capital. So I would say given, they are 11 million, given they employ people, they have the capacity to grow.”

These nano entrepreneurs serve as the vital wheels driving the economy forward, playing a crucial role in its sustenance and expansion.

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