Credit and finance for MSMEs: Lack of credit access to MSMEs has encouraged lenders such as Bank of Baroda over the past few years to acknowledge the cash flow-based approach to disburse credit to MSMEs through alternative data sources such as UPI transactions, income tax returns, GST returns, bank statements, CIBIL score, point-of-sale data, and more. Buy Now Pay Later, invoice-based financing, supply chain financing, co-lending, etc., are some of the collateral-free credit options for small borrowers depending upon their requirements and based on the cash flow data of their businesses.
Talking to FE Aspire at SME Artha 2022 event, Dhrubashish Bhattacharya who heads the MSME banking at reportedly India’s third largest bank Bank of Baroda and also spearheads its co-lending programme, explains the bank’s approach to MSME lending in terms of cash flow-based lending, partnerships with NBFCs for co-origination of loans to small businesses, and the bank’s role in the MSME sector’s recovery post Covid.
