Credit and Finance for MSMEs: The private sector lender, IDBI Bank on Monday announced the partnership with supply chain financing platform Vay Network Services as its fintech partner to provide digital supply chain financing (SCF) to MSMEs.
The Industrial Development Bank of India (IDBI) said it has signed a memorandum of understanding (MoU) with Vay Network Services for e-SCF (end-to-end digitalisation) services.
This partnership is expected to reduce paperwork and transaction processing time while providing a smooth customer experience, IDBI Bank said.
Supply Chain Financing enables MSMEs to get credit based on their approved invoices from the supplier helping them in managing their cash flows of their business.
The IDBI and Vay Network agreement aims to contribute to the growth of SCF penetration in India, which is less than 1 per cent of GDP. Moreover, SCF contributes to only 5 per cent of the outstanding banking assets/loans, said the company’s statement.
IDBI has an existing Cash Management Services (CMS) and e-trade platform. With the introduction of e-SCF, it aims to provide digital solutions to corporates and micro, small and medium enterprises (MSMEs).
Inaugurating e-SCF programme on the occasion of bank’s Foundation Day, Rakesh Sharma, MD and CEO, IDBI Bank, said, “Although traditionally banks have preferred lending working capital loans over supply chain financing due to various constraints and challenges, in the present context, fintechs have revolutionized the SCF segment by digitizing the interaction between all the stakeholders.”
Sharma highlighted that technology is making the process more efficient, flexible and transparent and is providing value-added services to end users.
Currently, the supply chain finance market in India is estimated at Rs 60,000 crore and is expected to grow by 17 per cent per annum, said J Samuel Joseph, Deputy Managing Director, IDBI Bank.