Tuesday, November 29, 2022

GST data-based borrowing improves MSMEs access to credit

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Vayana has been able to reduce the cost of funding MSMEs on its platform by 200-600 basic points in partnership with banks and NBFCs looking to finance the purchase of building materials to build their MSME portfolios.

Ram Iyer, founder and CEO, Vayana Network, said MSMEs have been undermined by the official banking system due to a lack of trust due to a lack of reliable information about them and the illegal costs of servicing large amounts of small MSMEs. Vayana addresses the lack of trust by using other reliable data such as GST and real-time data analytics to facilitate credit to MSMEs. Smaller MSMEs are incorporated into larger SCF programs made by the formal banking system, which puts them out of the hands of a less expensive market, he said.

Iyer said the cost of funding their network is as low as 200 to 400 SME points and up to 600 basic points in the event of last-mile funding. The company will be targeting $ 10 billion in revenue collection by 2022, and expects this growth to grow significantly and double on the platform every year.

Vayana has so far invested $ 6 billion in commercial finance with 300 supply chains in 25 different industries and is processing 1.7 million transactions.

Vayana and CRIF Solutions, which provide credit information, statistics, scoring solutions and decisions, recently introduced the MSME testing tool. Good Business Score is based on ongoing GST data. Parthasarathi Patnaik, chief risk officer, Vayana Network, said getting good points would help MSMEs improve their negotiation capabilities as the points were based on GST input, which is verified and reliable data.

The product has generated interest from MSMEs, companies, B2B service companies and lenders, and the company expects to test and hit more than 10,000 SMEs in the next quarter. Two public sector banks, two NBFCs and three businesses have already reached out to the company using the tool to evaluate their partners and customers.

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