YES Bank has been focussing on addressing credit demands of MSMEs and startups. In an interaction with ET Online, Rajan Pental, Executive Director, talks about the various aspects of the lender’s approach to MSME lending and how the bank aims to facilitate seamless credit access to small businesses. YES also targets bottom-of-pyramid MSME customers and streamlines the process of supply chain financing, he says. Edited excerpts:
ET: How is YES BANK facilitating MSMEs address their credit gap?
Rajan Pental: MSMEs are the backbone of the Indian economy, contributing approximately 30% to our GDP and nearly 50% to exports. Lending to SMEs and mid-corporates is a strategic priority for us. Investment in this sector is crucial, and supporting this sector’s growth is one of the core business objectives. We recognise the importance of timely financing for MSMEs, which face a credit gap of $33 trillion.
Through a dedicated MSME Cell, YES BANK disseminates various government schemes, including Credit Guarantee Schemes for Startups, subsidy schemes and cluster and skill development schemes. This ensures the alignment of the bank’s efforts with the government’s directional initiatives. The MSME cell offers specialised services and support, providing financial products, advisory services and tailored solutions to assist businesses with loan processing, financial planning and accessing government schemes and incentives. Additionally, YES BANK has launched digital overdraft — a paperless, unsecured loan specifically designed for bottom-of-pyramid MSME customers.
ET: What is the collateral-free funding that startups can avail under the YES MSME initiative?
RP: Startups can access collateral-free funding of up to Rs 10 crore through the YES Credit Guarantee Scheme for Startups. This significant financial support includes working capital and term loan facilities, all covered under a government credit guarantee by NCGTC (National Credit Guarantee Trustee Company).
ET: When was the YES MSME initiative launched, and what is the purpose of the SMARTFIN platform launched by the bank?
RP: YES BANK launched the YES MSME initiative in 2021. In FY24, YES BANK launched SMARTFIN, an innovative supply chain financing platform to provide a digitally enabled solution to onboard and manage the loans tailored for MSME customers. This platform streamlines the process of supply chain financing.
SMARTFIN offers SME customers a range of benefits. The digital onboarding feature simplifies the process by making it paperless and swift. The platform’s capability allows for digitally fetching transactional data of the borrower, providing a 360-degree view of cash flow movement to both the anchor and the MSME. For efficient loan management, the platform helps MSMEs monitor the upcoming maturity of their obligations and plan their cash flow accordingly. It also integrates with the MSMEs’ ERP software to support reconciliation.
ET: What are some of the specific green financing products offered by YES BANK for MSMEs?
RP: Our green financing solutions are designed to promote environmental sustainability, reduce carbon footprints and enhance energy efficiency among MSMEs, thereby contributing to the broader goal of building a sustainable economy.
A standout initiative is the YES KIRAN programme, which provides funding for solar panel installations. It allows MSMEs to migrate to zero electricity costs by financing up to Rs 3 crore for ground or rooftop solar panels, specifically for captive electricity consumption by manufacturers. A term loan offers a tenure of up to six years with a six-month moratorium, ensuring financial flexibility. Additionally, we provide end-to-end support with tie-ups with leading solar panel installers.
ET: What unique features are included in the YES MSME online digital banking suite for SMEs?
RP: The YES MSME Online digital banking suite offers a comprehensive set of features designed to provide MSMEs with a seamless and integrated banking experience. This digital platform serves as a single interface for multiple banking needs. Key features include consolidated account access, allowing MSMEs to view and transact all their operational business accounts conveniently through an app from any location. The platform offers comprehensive loan management, enabling users to obtain a consolidated view of all their loan relationships for easier tracking and management of financial obligations. Trade finance monitoring is also provided, with the ability to track bank guarantees and letters of credit in real-time, besides enabling drawdown of packing credit facilities and forward contract booking.
For financial reporting, MSMEs can submit stock and debtor statements directly through the platform, streamlining regulatory compliance and financial reporting processes. Additionally, a service request functionality allows users to raise and manage various service requests. The platform also includes payroll management features, simplifying the process of managing employees’ salaries for MSMEs.
ET: Automation and AI/ML technologies are becoming increasingly popular for process optimisation. What are you doing on this front?
RP: We are actively embracing emerging technologies to enhance our services and optimise our processes. We have successfully integrated AI into several key areas, including risk management and reconciliations, automation of repetitive tasks to free our staff for more complex activities, predictive analytics to minimise errors and personalised marketing strategies.
We are in the early stages of exploring generative AI applications, focusing on evaluating chatbots and virtual assistants to enhance our customer service and identifying potential use cases that align with our commitment to data security. Our AI initiatives are yielding significant benefits, such as improving budget management and strategic planning, enhancing operational efficiency, and reducing costs.
We are taking a measured approach due to the sensitive nature of banking data and are closely monitoring the development of relevant laws and policy frameworks.
