The Government of India (GoI) has announced a comprehensive financial package for non-banking financial companies (NBFCs) and micro, small and medium enterprises (MSMEs), to infuse liquidity in the sector amidst the COVID-19 crisis. As part of the package, MSMEs can avail INR 300,000 crore in the form of collateral-free loans, INR 20,000 crore of subordinated debt and INR 50,000 crore equity infusion through fund of funds. This package is expected to strengthen the MSME segment and provide it with necessary capital. FinTechs, owing to their unique position in the economy, can leverage the opportunity as users of funds, act as enablers in efficient disbursement to NBFCs and MSMEs, and play a critical role in building an ‘Atmanirbhar Bharat’ (self-reliant India).
E-marketplace data to drive transaction-based lending through FinTechs
Enabled by data from the Government e-Marketplace (GeM), FinTechs such as lending firms, payment firms and neobanks can develop end-to-end solutions to disburse funds to MSMEs through digital channels.
Online lending marketplaces and account aggregators
An online lending marketplace, conceptualised by a software think tank and a non-profit collective of account aggregators, is planned to be launched by the government and is uniquely placed to usher in an era of data-driven lending for MSMEs.
Integration of GeM with the Trade Receivables Discounting System (TReDS)
The integration of TReDS and GeM, announced in February 2020, presents a significant opportunity for lending FinTechs to offer supply chain finance products to MSMEs working with public sector undertakings (PSUs) and Government departments.
Liquidity facility and partial credit guarantee scheme for NBFCs
Multiple liquidity infusion measures for MSMEs
Demand for COVID-19 specific products
Associate Director, FinTech & Innovation Strategy, PwC India
Avneesh Singh Narang
Associate Director, FinTech and Innovation Strategy, PwC India