Mumbai, : India's largest bank, State Bank of India (SBI), has been a pioneer in digital banking. Today, the Bank has taken yet another giant leap in this space with the launch of SBI e-Smart SME, a working capital loan offering for sellers on e-commerce platforms.
The sellers can apply for loan online and get immediate sanction – thereby enabling “loans at the click of a button”. This innovative product moves away from traditional lending based on financial statements like balance sheet and income tax returns; and instead uses proprietary platform data and surrogate information from public domain to assess the seller's credit worthiness for loan sanctioning.
The product is launched in partnership with the well known e-commerce platform Snapdeal. In February 2010, Kunal Bahl along with Rohit Bansal, started Snapdeal and is now India’s largest online marketplace, with the widest assortment of 20 million+ products across 500+ diverse categories from thousands of regional, national, and international brands and retailers. With millions of users and more than 230,000 sellers, Snapdeal is the shopping destination for internet users across the country, delivering to thousands of cities and towns in India. In its journey till now, Snapdeal has partnered with several global marquee investors and individuals such as SoftBank, BlackRock, Temasek, Foxconn, Alibaba, eBay Inc., Premji Invest, Intel Capital, Bessemer Venture Partners, Mr. Ratan Tata, among others. Snapdeal’s vision is to create India’s most impactful digital commerce ecosystem that creates life-changing experiences for buyers and sellers.
SBI joined hands with Snapdeal in May 2015 to finance working capital requirements of merchants selling on their platform. Pilots were conducted for Snapdeal sellers to apply online for SBI working capital loans through Snapdeal's Capital Assist platform. The tie-up has now taken a giant leap where in the seller can apply for a loan digitally on Snapdeal's Capital Assist platform and get it sanctioned instantly.
It is State Bank of India’s endeavour to fuel the growth of young and digital India, by providing access to quick and low-cost finance to millions of SMEs helping them grow big in their business. This new product enables millions of small brick-and-mortar merchants who are selling on the e-commerce platform to overcome their liquidity crunch and expand their business exponentially and digitally.
"The e-Commerce growth has created a whole new ecosystem enabling more than 5 lakh sellers to sell their products on a digital platform. In the process, it has also opened up a wide new world of opportunities for the banking industry – ranging from personal segment products like consumer finance and wallet to business lending for merchants and other service providers in the backend. It is now upon us to leverage these opportunities. Doing so requires us to think and go beyond the traditional banking products and delivery services." SBI chairman Arundhati Bhattacharya said, after launching the product.
"With this new facility sellers can apply for the loan online on the e-commerce platform and get instant sanctioning of the loan. Platform performance data enables us to assess the merchant's credit worthiness without relying on traditional financials like Balance Sheet and Income Tax Returns. There is abundance of surrogate information like social media footprint, regulatory filings, that is available in the public domain which can be leveraged to assess creditworthiness. The product is also in line with our focus on building a risk mitigated portfolio." she said.
"This product is a truly disruptive offering in the industry – this platform leverages innovative technology and big data analytics to instantly assess the loan application in an objective manner. The product has minimal documentation hassle and can be applied from the comfort of their premises. It will significantly improve the customer experience and help reduce the time involved in getting loans sanctioned." Said Rajnish Kumar, SBI MD, National Banking Group at the event.
Initially, sellers will be able to avail working capital loans upto Rs. 25 lakhs. Loans upto Rs.10 lakhs are collateral free and carry a very competitive interest rate. There is a special concession of 25 basis points for women entrepreneurs. All loans below Rs. 10 lakhs will also get covered under the Pradhan Mantri Mudra Yojana Scheme of Government of India.
"Access to quick and easy finance will provide necessary push to the growth of e-Commerce industry and consequently the SME segment. The boom of e-Commerce will also provide impetus to the Government's 'Make in India' campaign; as more and more sellers grow their business online. A vibrant SME segment is very important to meet the macro-economic goals for the economy." he added.
The Bank had hired management consulting firm, The Boston Consulting Group to facilitate development of this credit model.
SBI has about one million MSME customers with a loan book of around Rs 1,80,000 crore as on December 2015 .
SBI and Snapdeal are exploring collaboration opportunities on various other areas in the digital banking space.
The launch event was graced by the entire top management – MD Rajnish Kumar, MD B Sriram, MD V. G. Kannan, MD P. K. Gupta, DMDs and CGMs of the Bank. The CFO of Snapdeal Anup Vikal was also present with the Snapdeal Capital Assist team.