Exclusive: SIDBI’s 59-min loan scheme operator to fund fintechs, explore micro lending

Credit and Finance for MSMEs: Online PSB Loans would also be looking at making end-to-end loan disbursement possible within 59 minutes through technology infrastructure instead of only in-principle approval currently.

The portal currently has more than 21 partner banks including SBI, ICICI Bank, Kotak Mahindra Bank, Punjab National Bank, etc. (Image: Pixabay)

Credit and Finance for MSMEs: Online PSB Loans, which operates SIDBI’s 59-minute in-principle loan approval scheme for MSMEs, would be acquiring stakes in new fintech startups to leverage their technology solutions to enhance credit disbursements for small businesses. The strategic partnerships with startups is one of the areas the company is looking to develop with the new investment of Rs 50 crore from HDFC Holdings and TransUnion it announced on Tuesday. It would also deploy the capital towards hiring and creating awareness about the scheme through marketing and branding. Online PSB Loans is co-owned by SIDBI and other public sector banks. 

“We are willing to make strategic investments in young fintech startups and participate in their seed or very early stages of capital raising. We are looking at startups that provide and manage data such as automating property records, contracts or anything related to the entire lending infrastructure. It would help them get access to different banks through us which otherwise takes a lot of time to get access,” Jinand Shah, Co-founder and CEO, Online PSB Loans told Financial Express Online. 

The portal currently has more than 21 partner banks including SBI, ICICI Bank, Kotak Mahindra Bank, Punjab National Bank, etc. It has enabled the disbursement of 2.20 lakh loan applications involving Rs 64,544 crore as of November 30, 2021, as per data from the MSME Ministry. Fintech startups would have access to linkages to all the banks linked to the portal.

“For instance, a startup might have to go to every bank to convince their technology solution but through us, they just need to convince us and if we plug them in our infrastructure, they get to access them from one platform while banks can also leverage the portal to connect with these startups,” said Shah. The investment could also be joint with HDFC and TransUnion.

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“Digitisation of the lending process will improve customer experience and help in significant cost and time savings. This is the preferred medium of credit delivery to the customers as has been our experience as over 89 per cent of new home loan applications are received through digital channels,” said Renu Sud Karnad, Managing Director, HDFC Ltd on investment in Online PSB Loans.

The company would also be looking at making end-to-end loan disbursement — from application to amount getting credited into borrower’s bank account — possible within 59 minutes through technology infrastructure instead of only in-principle approval currently. This means, “Without going to a bank branch, a borrower can get disbursement in 59 minutes. In certain segments, banks have already started doing it individually. That’s our focus for the next six months,” added Shah. 

Another area, SIDBI’s platform is exploring through the new round of capital is micro lending. Online PSB Loans is working with SIDBI on a project where micro units such as street vendors would be able to get sachet loans or cash-flow based lending of anywhere between Rs 1,000 and Rs 10,000. Launched in November 2018 by Prime Minister Narendra Modi, the 59-minute loan scheme is said to provide in-principle approval to applications for a term loan or working capital loan from Rs 1 crore to Rs 5 crore even as the approval doesn’t guarantee credit disbursement.

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