Private sector lender YES Bank has launched a credit product to help small businesses avail secured loans based on their Good and Services Tax (GST) returns.
Called YES GST, the product is an overdraft (OD) facility for micro, small and medium enterprises (MSMEs), and is a first-of- its-kind product in the banking industry. Through this, small businesses can avail ODs up to ₹1 crore, based on their annual turnover and backed by GST returns.
The bank is targeting a loan book of ₹1,000 crore through YES GST during financial year 2018-19. However, the bank’s overall exposure to MSMEs as on March 31, 2018, has crossed ₹32,500 crore.
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Pental said that with this product any additional assessment of balance sheet, or bank statements, will not be required, and hence, the loans can be processed within a day, as against the earlier requirement of 40-60 documents, which needed weeks to verify, thus delaying the loan disbursal.
This OD facility, which is an extension of credit from a lending institution when an account reaches zero, can be availed by an MSME against mortgage of residential or commercial property. The sanctioned amount can be utilised by the MSME either fully or in tranches, said Pental, adding that the loan’s assessment would be done on the basis of the last six months of GST returns. The documents are collected after getting consent from the customer.
YES Bank had launched ‘YES GST programme’ last year to help MSMEs understand the impact of the changes and prepare them for migration to the new GST system. Till date, the bank has conducted 112 workshops, thereby impacting over 9,500 MSMEs that have availed the loans.