Govt leaves startups behind in e-lending to MSMEs: Approves 30K Cr in just 90 days

Amidst Government-run banks ongoing struggle with low profits and bad loans aka NPAs, online lending marketplace PSB Loans in 59 minutes has emerged as the largest online lending platform in three months after its launch.

The online lending marketplace, which connects public sector banks with micro-small and medium enterprises (MSMEs), has sanctioned loans worth over Rs 30,000 crore.

Loan approvals have already exceeded Rs 30,000 crore and disbursements are estimated at Rs 25,000 crore, said Credit Suisse report.

Over Rs 6,400 crore is estimated to have been sanctioned through the platform to an estimated 24,000 MSMEs, the report said. About 40,000 entities have received in-principle approval from banks.

Last year in November, the lending portal was launched to provide credit from 1 lakh to Rs 1 crore to MSMEs to reduce the loan processing turnaround time from 3-4 weeks to just 59 minutes. The govt began the initiative to ease fund flow to the credit-starved MSME sector.

As per its eligibility criteria of the platform, a borrower should be GST, IT compliant and must have six months bank statements. The platform is connected with 21 public sector banks, including State Bank of India, Bank of Baroda and Bank of India.

Since the launch, the sanction rates have climbed over 20 percent to 60 percent. However, approval rates are lower for new borrowers in comparison to existing ones, a PTI report via BS mentioned.

The loan approval goes through a process where in-principle approval comes first, followed by a branch visit, physical documentation and regular appraisal by bankers.

The report further added that if PSB Loans in 59 minutes continue to grow like this, it could also help PSBs regain market share and improve asset quality, which has been on the downside.

In the first quarter of 2019, PSBs had 15.2 percent nonperforming assets (NPAs) against 3.9 percent for private lenders and 5 per cent for nonbanking finance companies (NBFCs).

Three months old lending platform competes against lending marketplaces such as Bankbazaar, Paisabazaar, Deal4loans, and tech-enabled NBFCs firms like Capital float, Lendingkart.

None of them has achieved a massive scale in parallel to PSB Loans in 59 minutes. Lendingkart and Capitalfloat, who have been operating in the space for over last four years, have managed to disburse Rs 1700 crore and Rs 4500 crore respectively.