Digital SME bank can provide services like business CASA accounts to MSMEs: co-founder of Biz2Credit

Ahead of the Union budget, Rohit AroraCEO and co-founder of Biz2X, has suggested that the government should come up with a specialist SMEs digital bank to meet the financing needs of small businesses. Minister of Finance Nirmala Sitharaman will present the final full budget before the 2024 general election in the Lok Sabha on February 1, during which it is expected to announce a slew of measures to boost economic growth.

Arora said that small and medium-sized businesses are constantly facing credit shortages and it is about time the government came up with a specialized bank to meet their demands.

“SME digital bank can provide SMEs with a range of services such as business CASA accounts for transaction banking, invoice and payment processing, correspondent banking, SME credit and trade finance and other business financial services,” he said.

Biz2X is a turnkey global SaaS platform that enables financial institutions to deliver a customized online lending experience to their small and medium-sized business customers.

Furthermore, Arora emphasized that such a bank could also include a dedicated portfolio of income-linked credit instruments that will serve the credit needs of SMEs and also help diversify SME credit from the current system of collateral-based financing, which limits the practical side of running a small business.

Being fully digital, he says, such banks can process faster loan applications and payouts for SMEs, supported by advanced data analytics and technology-enabled decision-making.

“The current system of portfolio mapping and underwriting is a tedious and time-consuming process, involving extensive documentation and multiple visits to banks. Digital banking will accelerate loan processing, lower risk and scale faster to meet the lending needs of small businesses.” he said.

He said many major sovereign wealth funds, pension funds, multilateral agencies and major Indian private equity funds would like to invest in such an initiative given its huge economic potential.

About 6.3 crore MSMEs (Micro, Small and Medium Enterprises) provide more than 11 crore jobs in India.

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