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Data driven lending will help increase flow of formal credit to MSMEs: Study

Updated: Jul 07, 2017 10:58:35am
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Data driven lending will help increase flow of formal credit to MSMEs: Study

New Delhi, July 7 (KNN) With credit flow being a major concern for the Micro, Small and Medium Enterprises (MSMEs), there is a need for a mechanism of lending based on data, a study conducted by Indian Software Product Industry Round Table (iSpirt) emphasized. 

The study observed that in the recent times there is a shift in the mode of payments. More enterprises are starting to deal in digital payments. This data can be used by Banks and Non-Banking Financial Companies to keep a track of the nature of the borrower. The credit history can therefore be looked at to extend loans to the MSMEs.

In a press interview, Praveen Hari, official at the iSpirt said that the entire paperwork that is required for clearance process can be shifted to digital means as there is a rise in the digital footprint in the country.

The study further revealed that under the newly introduced Goods and Services Tax (GST) ,  the MSMEs will now be able to seek credit based on the data of their tax returns, therefore eliminating the fear of it turning into a bad loan from the mind of the lender or the bank.

Also with the tax return data, the lender can easily determine the right amount that can be extended to the enterprise as credit. (KNN/ DA)

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