MSMEs encouraged to use digital platforms to enhance loan eligibility

New Delhi, 16 Dec (KNN) The central government on Wednesday has approved a INR 1,300-crore incentive scheme to promote digital transactions using UPI and Rupay debit cards.

This scheme will facilitate acquiring banks in building a robust digital payment ecosystem and promoting Rupay debit card and BHIM-UPI digital transactions across all sectors and segments of the population and further deepening digital payments in the country. 

In an annual banking conclave held by the Mint, Nandan Nilekani, co-founder and chairman of Infosys Ltd  said “Aadhaar and UPI (unified payments interface) are helping transactional efficiency, migrating to high-volume, low-cost and small ticket-size transactions. This leads to expanding the market, as well as social inclusion. What these are now doing is also creating a digital footprint. For example, when a small retailer sells or buys something digitally, there is a footprint of that transaction. Invoice details of digital purchases are uploaded automatically to the GST (goods and services tax) portal to file taxes. Hence, as more consumers and small businesses transact digitally, they create digital footprints."

These footprints have helped the Reserve Bank of India establish India’s Account Aggregator (AA) system in September.

“What AA does is empower consumers and small businesses to get access to financial services. They can get their bank statements, GST, TDS (tax deducted at source) and other data and request an AA to securely share this with lenders. This process will dramatically democratize lending. Small borrowers can borrow efficiently, quickly and at low cost in near real-time," Nilekani said.

Digital transactions have grown massively post covid across businesses. Government needs to insist banks to issue more Rupay cards specially to MSMEs.

Transactions made on the RuPay debit cards are processed within India. The processing fees for domestic transactions is relatively lower than visa card transactions. Since Visa is an international payment system, the processing of the transaction takes place abroad. As a result, the service provider charges a higher processing fee.