The Reserve Bank of India (RBI) has identified the products of five entities as viable for lending to micro, small, and medium enterprises (MSMEs) within the regulatory sandbox cohort. The RBI further disclosed that all these entities are now exiting the cohort, signifying a significant step in the testing phase.
According to a statement released by the central bank, “The products found acceptable under this Cohort may be considered for adoption by Regulated Entities subject to compliance with applicable regulatory requirements.” This implies that these tested products could potentially be integrated into the offerings of regulated financial institutions, pending adherence to relevant regulatory standards.
In June 2022, the RBI had initially chosen eight entities to participate in this particular cohort within the regulatory sandbox. The selection aimed to foster innovation and experimentation in the realm of MSME lending. With the successful identification of products now deemed viable for this sector, the central bank is moving forward in its efforts to promote innovative financial solutions and support the growth of the MSME segment.
The Products
The five companies include FinAGG Technologies Private Ltd whose product ‘Quick Cash Flow’ enables a completely digital cash flow-based credit underwriting process. It provides credit line through co-lending to MSMEs to purchase inventory from large corporates via a smooth digital process.
Mynd Solutions Private Ltd’s product ‘M1xchange Small-Small’ is a one-stop plug and play platform for cash-flow based financing to small MSME seller on TReDS. The product tested invoice factoring, based on credit profile of small MSME buyers using its proprietary digital credit analytics engine. It aims to significantly enhance the coverage of liquidity needs of small MSMEs selling goods and services to small MSME buyers.
Rupifi Technology Solutions Private Ltd’s ‘Pay by Rupifi’ provides MSMEs real-time access to working capital through digital credit lines which can be used to make purchase from B2B marketplaces. The entire process of consented data sharing, data verification, risk calculation, disbursement and repayment are digital.
Small Industries Development Bank of India’s product ‘GST Sahay’ is an application developed using Open Credit Enhancement Network (OCEN) and Account Aggregator framework for invoice-based finance to MSMEs. The entire loan cycle is real time, contactless, cash flow based and end to end digital using multiple data points for a smooth loan journey. The application aims to enable multiple use cases for working capital support to MSMEs.
SysArc Infomatix Private Ltd’s product ‘LENDperfect—Shishu Mudra’ enables an end-to-end digital straight-through process (STP) journey for MSME Mudra Loan in partnership with banks. The entire loan journey is streamlined with real-time KYC verification, credit bureau checks, eSignatures, instant approvals, instant account opening, and disbursement.
The central bank also opened the fifth cohort of the regulatory sandbox till November 30. This cohort of the regulatory sandbox will be theme-neutral.
“Innovative products, services, and technologies cutting across various functions in RBI’s regulatory domain would be eligible to apply,” it said.
