FE Exclusive: SIDBI to launch invoice-based financing app GST Sahay for MSMEs, opens it to banks and NBFCs

Credit and Finance for MSMEs: MSMEs can use GST Sahay to get quick working capital loans from their unpaid invoices. The loan size would depend on the invoice value that could start from as low as Rs 10,000.

FE Exclusive: SIDBI to launch invoice-based financing app GST Sahay for MSMEs, opens it to banks and NBFCs
Banks will be able to use the digital infrastructure of GST Sahay to build their own products on top of it for their customers.

Credit and Finance for MSMEs: Small Industries Development Bank of India (SIDBI), the leading financial institution for the MSME sector, has invited banks and NBFCs to test its invoice-based financing app GST Sahay, said a source aware of the developments.

Currently, SIDBI is testing the GST Sahay platform with its own members and also on the RBI Sandbox, a controlled environment for testing financial products. Thirteen transactions with its customers have already taken place on the app. 

On Thursday, SIDBI presented GST Sahay’s proof of concept to certain private and public sector banks and NBFCs in a meeting. Senior executives from technology think tank iSPIRT Foundation and SIDBI’s digital lending arm Online PSB Loans (OPL) were also present. “The rationale behind the meeting was to present the proof of concept to the banks so they can develop the app further for their own customers,” said the source. 

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GST Sahay will be an invoice-financing marketplace where MSMEs can use their unpaid invoices to get quick working capital loans. The loan size would depend on the invoice value that could start from Rs 10,000 and could go up to Rs 3 lakhs. 

While there will be one central GST Sahay app, banks can use the digital infrastructure and build products on top of it for their customers. “We are expecting a quicker uptake from NBFCs because banks are still used to offering cash credit limits to their customers and might take time to adapt to invoice financing,” the source said. 

The market launch will take another 5-6 months because the current plan is to let the lenders work on it and grow it organically with their customer base. 

In a recent session with the MSME members of the industry association PHD Chamber of Commerce and Industry, Sivasubramanian Ramann, SIBDI’s Chairman & Managing Director had said on GST Sahay, “The interest rates for working capital loan from banks can go up to 16-18 per cent. The marketplace model will be central to the invoice-financing platform so that MSMEs can take up the most competitive offer.” 

At the core of the app would be the central database hosted by SIDBI where information on all invoices from MSMEs will be stored. It will be the central link for all lenders to feed information and also access information on the status of the invoice. 

The database will also be linked to the Goods and Service Tax Network (GSTN) and the banks through the account aggregator network. This will give the lending institution an understanding of what that entity looks like. The lender can do its analytics on the regularity of the business’s payments or how stable the business is and have a clear view of the relationship between the business and its various vendors and suppliers, Ramann had said. 

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