Yes Bank goes bullish on MSMEs; looks to prune turnaround time to one day

The bank is looking to disburse Rs 500 crore in the next one year through a newly-launched lending programme

Going aggressive on MSME (micro, small and medium enterprise lending), Yes Bank is looking to reduce loan turnaround time to one day in the segment.

The bank is looking to disburse about Rs 500 crore in the next one year through its newly-launched lending program, the Smart Edge for MSMEs. Under this, loans will be disbursed on the basis of two sets of statements—GST returns and bank statements. Small enterprises with loan requirement between Rs 1-3 crore will be initially covered under the programme, said Rajan Pental, Senior Group President and Group Head - Branch and Retail Banking, Yes Bank.

The bank  expects MSME to account for nearly 22 per cent of the overall lending in the next one year, from about 15 per cent at present.   

The turnaround time of the loan approval and disbursement would reduce to a day from about three to four days earlier, and the collateral cover requirement will also reduce to around 85 per cent from about 100-120 per cent earlier, said Pental.

The bank expects digital platforms to play a significant role in the MSME customer acquisitions going forward. From about three per cent at present, the bank expects digital platforms to account for 10 per cent of MSME loan portfolio in the next one year.  

In 2018, the government had introduced a ‘59 minute’ loan scheme, which promised loans of up to Rs 1 crore from public sector banks (PSBs) through an online lending marketplace. The scheme  too uses GST return and bank statements for a quick turnaround of loans.

According to Pental, Yes Bank’s scheme would apply to MSMEs with larger credit needs, between Rs one and three crore, and one of the first of its kind.