Tag: MSMEs

Digital lending to MSMEs poised for major growth in India, says report

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

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Digital lending to MSMEs in India is expected to rise 10 to 15 times by 2023 to 6-7 lakh crore ($80-100 billion) in annual disbursements, according to a report. The study has been released by Omidyar Network, the impact investing firm established by Pierre Omidyar, the founder of eBay, and The Boston Consulting Group.

“Digital lending has the potential to propel the productivity of India’s MSMEs to global leadership,” said Roopa Kudva, partner and managing director, India at Omidyar Network.

“As of 2018, most of the credit demand for $600 billion is being met through informal sources. And therefore, the report indicates that India stands on the cusp of a watershed moment and can serve as a case study for other nations to elevate the role of MSMEs in the economy.”

India’s 60 million MSMEs are broadly defined as businesses with annual revenue up to Rs 250 crore make a significant contribution to its employment and its gross domestic product (GDP).

“With almost 60 percent of MSMEs borrowing informally today, MSME lending is set for disruption with massive growth in formalisation and digitisation,” said Saurabh Tripathi, senior partner and director and Asia-Pacific leader, Financial Institutions Practice at BCG.

“Easier and cheaper credit through digital lending has the potential to trigger a virtuous cycle for formalisation: up to 85 percent of MSMEs could be formal by 2023, 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

Assembly Elections 2018: Rajasthan gets ready for polls

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

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The state of Rajasthan goes to polls in barely three weeks and ahead of that CNBC-TV18 traveled to Kishanhgarh Mandi, the biggest marble market in Asia, to get a sense of how the business is doing after the goods and services tax (GST).

Three years ago, the market used to sell goods worth Rs 4,200 crore and today that number is down to Rs 3,400 crore. What do marble traders have to say about GST, demonetisation and are they happy with schemes for MSMEs.

GST is a sour point with traders at the Kishanhgarh Mandi. The state government also says that they put a lot of emphasis on MSMEs in the last five years. The traders here feel otherwise. They say, either those schemes have not had any impact on the ground or they are yet to take off.

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

Ahmedabad-based company linked to rapid-fire MSME loans triggers privacy concerns

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

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On November 2, Prime Minister Narendra Modi unveiled a quick loan approval scheme for medium and small enterprises looking to borrow up to Rs 1 crore. Packaged as a Diwali gift for mid-sized businesses still coming to terms with the Goods & Services Tax (GST), it underlined the advantages of the new tax system.

Owners of small businesses, upbeat on this new loan window to address their liquidity issues, logged on to the platform to log in their applications. On completing the process, many got spooked by confirmation mails coming from a private domain: capitaworld.com.

Fears over data privacy — the platform requires GST log in details, KYC documents, bank statements, business ownership details, information about directors, income tax returns and other personal particulars for processing applications — had many applicants and prospective applicants worried. Why should a private enterprise have access to their data? How can they be sure the information won’t be misused? These were the questions top of the mind for the small business community.

One-Year-Old Company

A little research revealed that Ahmedabad-based CapitaWorld was reportedly born out of the vision of Jinand Shah, a young CA and CFA, Aviruk Chakraborty, a budding techie (who isn’t listed among the management team any more) and Vinod Modha, a seasoned CA with links with several business houses. The venture commenced operations in 2017 and has been working with NBFCs to speed up their credit assessment process through use of algorithmic analytics for a fee.

The questions this raised were around the capacity of the fledgling entity to manage the national loan assessment process, the privacy of data, the reason for such an exclusive arrangement (with the government batting for a private platform) and the revenues accruing to the platform for this monopoly service.

Every applicant requires to pay a fee of Rs 1,000.

Does all of this go to CapitaWorld? To give you a sense, for just one lakh applications the fee would amount to Rs 10 crore. India is estimated to have over 36 million MSMEs (c), though a large number are unregistered, and that offers a context of the scale.

What The Government Says

The growing concerns started spreading through social media among small businessmen and to get to the core of the matter, CNBC-TV18 checked with sources in the government on whether these fears were legitimate.

The sources pointed out that CapitaWorld was majority (56 percent) owned by public sector institutions and banks (SIDBI, State Bank of India and Bank of Baroda), and that there was a plan to increase the stake to 76 percent in due course. They also looked to allay fears around data privacy saying that no “third-party” data is stored on the platform.

Responding to privacy concerns, SIDBI said in a tweet that a rigourous process was followed for shortlisting and selection of the platform and capitaworld including third party validations and oversight.

a rigourous process was followed for shortlisting and selection of the platform and capitaworld including third party validations and oversight. @SBIChairman @rkumar1958 @pnbindia @SBIofficial @MyIndianBank @VijayaBankIndia @bankofbaroda

— Small Industries Development Bank of India (@sidbiofficial) November 6, 2018

The company capitaworld owned and controlled by sidbi and 5 PSBs. 4 out of 7 directors are public sector shareholders nominee. @SBIChairman @rkumar1958 @pnbindia @SBIofficial @MyIndianBank @VijayaBankIndia @bankofbaroda

— Small Industries Development Bank of India (@sidbiofficial) November 6, 2018

While the public institutional shareholding is comforting, there still remain many unanswered questions around the process of selection of CapitaWorld, its credentials, revenue model, privacy and security standards. Clearly, the government will need to be more transparent to allay the concerns of prospective borrowers and reinfuse confidence in the platform.

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 to get easier credit, loan approval in 59 minutes: Here’s how you can avail it

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

Listen to the Article (6 Minutes)

Prime Minister Narendra Modi on Thursday launched a programme to approve loan requests of up to Rs 1 crore for small- and medium-sized businesses within 59 minutes, as he tries to woo a large voting block ahead of a series of elections.

The Modi government also announced to spend Rs 6,000 crores in order to set up 20 hubs with around 100 tool rooms which will aid in upgrading the existing technologies of the MSME sector.

• Only GST registered MSMEs will get 2 percent interest subsidy on fresh loans, while a website psbloansin59minutes.com will sanction loans up to Rs 1 crore within 59 minutes.
• Through data analysis of GST returns, tax returns and bank account statements, the portal will assess the creditworthiness of the applicant.
• For exporters receiving loans in the pre-shipment and post-shipment period, there is an increase in interest rebate from 3 percent to 5 percent.

Modi also announced measures to simplify rules, regulations and procedures for the MSMEs. Besides the filing of single common form for eight labour laws and a single approval for environmental clearance, the package included plans for the creation of special clusters for MSMEs in the pharma sector for which the government will bear 70 percent of the total cost.

With inputs from agencies.

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