In yet another push for the digital credit ecosystem, small traders and MSMEs will be able to secure instant working capital loans from the banks using their Goods and Services Tax (GST) profile with an app developed by an Ahmedabad-based start-up.

The GST Sahay app, developed by digital credit platform provider Online PSB Loans (OPL) will enable small store-owners, kirana/grocers and other micro-small and medium enterprises (MSMEs) to secure instant bank loan between ₹10,000 to ₹2 lakh.

Notably, OPL’s infrastructure has also been deployed for the rollout of Reserve Bank of India (RBI) Innovation Hub’s pilot on GST Sahay.

Updating details

“The traders or store owners will have to update their details such as GST profiles with invoices generated etc on the GST Sahay app and can seek loans from their bank. Based on their GST profile and the KYC, the bank can instantly approve the loan. This will meet any short-term funding requirement for these small traders,” said Jinand Shah, MD & CEO, Online PSB Loans.

Over 1.2 crore GST-filing MSMEs and small traders are set to benefit from this GST Sahay app.

“The rate of interest for such loans would be 8-12 per cent depending on the bank. SIDBI is currently testing this app for their clients. We expect a rollout in the first quarter of this fiscal,” said Shah adding that this is first of its kind product in the country that enables instant short-term credit to MSMEs using their GST profiles.

Launched in 2018, OPL platform has majority stake owned by 10 financial institutions including public sector and private banks and other development credit institutions, who are also among a large base of its clients that includes financial institutions.

End-to-end digitisation

Apart from MSMEs, OPL’s platform for digital lending is also being used for end-to-end digitalisation of Kisan Credit Card (KCC) in Karnataka, where State Bank of India (SBI), Bank of Baroda (BOB) and Punjab National Bank (PNB) are using this platform to provide credit to farmers. This has reduced the duration of availing credit from 3-4 weeks to about 5-10 minutes.

On his recent visit to Ahmedabad M K Jain, Deputy Governor of RBI had shared encouraging outcome of the pilot project and underlined the banking regulator’s intent to expand such platforms to “all types of credits particularly for the bottom of the pyramid in the society”.

‘Path-breaking platform’

“ is a pathbreaking platform of OPL designed for automation of credit for borrowers. We are India’s largest online lending platform mapped to all current lending processes irrespective of the type of bank or lending institution. In past five years, we have processed loan applications worth more than ₹1.3-lakh crore of which disbursements were ₹72,000 crore. In total we have processed over 7 lakh applications in this period,” said Ronak Shah, Co-founder and COO, OPL.

For OPL, the revenue comes from the one-time processing charge of the loan application. The revenues have grown about 25 per cent year-on-year for past three years, but it expects to breakeven this fiscal.