Bank-backed online loan approval platform in India plugs SME funding gap

Since its launch in November 2018, the platform approved loans worth $4.23b.

An online loan approval platform that connects 21 public sector banks (PSB) in India has become the largest online lending platform in the country within three months of its launch with approved loans of over $4.23b (RS 30,000 crore), reports The Economic Times. 

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Over $903.36m (Rs 6,400 crore) is estimated to have been sanctioned through the platform called PSBLoansin59minutes.com and redirected to an estimated 24,000 SMEs, according to a report from Credit Suisse. Roughly 40,000 enterprises have received in-principle approval from banks as turnaround time has been significantly reduced to a week from over a month.

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The platform works by using GST data, tax returns, bank statements and credit bureau information to process requests. Its member banks include State Bank of India, Bank of Baroda and Bank of India.

Compared with other banks, PSBs have a weaker asset quality in the MSME sector, with PSBs holding 15.2% non-performing assets (NPAs) against 3.9% for private lenders. However, the warm response to the platform may just be the boost that state lenders need to regain market share and improve asset quality.