The State Bank of India has sent advisories to nearly 100 sellers, coming under online marketplace Snapdeal's capital-assist programme, to reduce their outstanding loans above their drawing power.
The State Bank of India has sent advisories to nearly 100 sellers, coming under online marketplace Snapdeal’s capital-assist programme, to reduce their outstanding loans above their drawing power. The advisory comes following a letter written by All India Online Vendor Association (AIOVA) to Union Commerce Minister Nirmala Sitharaman, raising fears that Snapdeal may default on payments to the sellers. The letter estimated that in any given month, Snapdeal holds Rs 300-400 crore in the form of outstanding dues and goods in transit or refunds. “We have sent advisories to not more than three-digit number of sellers, coming under Snapdeal’s capital-assist programme, asking them to reduce their outstanding loans above their drawing power,” SBI Chief General Manager (SME) G K Kansal told PTI.
Kansal said the bank reviews the sales position of the sellers every quarter and asks them to reduce their outstanding loans if their sales take a dip in this period. “We review their (Snapdeal sellers) sales position every quarter, and if their sales comes down during this period, their drawing power also comes down automatically. So subsequently, we ask them to reduce their outstanding loans and bring it down to their drawing power,” Kansal said. Snapdeal had launched the capital-assist programme to make credit available for sellers in 2014, through a network of about 27 banks and financial institutions, including SBI, Axis Bank, Tata Capital and Reliance Capital.
Asked if it is an issue of raising alarm bells asking the sellers to reduce outstanding loans, Kansal said it is a normal business and not an issue of NPA. “It is only a fluctuating facility which moves with the sales level. So if the sales goes up next month, their drawing power also shoots up. If their sales drop, the drawing power also drops down.So it is a normal business,”he said dismissing media reports which raised an alarm over the situation.
“It is not an issue of NPA. Only thing, they are temporarily irregular because of lower sales,” he added. Earlier this month, Axis Bank had issued notices to some Snapdeal sellers, seeking immediate repayment of outstanding loans and withdrawing unavailed credit, citing below-par transaction flow. Snapdeal has struggled to deal with slowing growth, mounting losses, falling market share, and an exodus of senior executives in recent months.