SBI ties up with Snapdeal, PayPal

Manufacturers & traders on online retailers to get loans; payment solution portal to help with overseas donation for govt projects

With an eye on booming e-commerce, the State Bank of India on Thursday tied-up with two of the biggest online retail and payment solution companies, Snapdeal and PayPal respectively.

On Wednesday, the bank had signed a memorandum of understanding (MoU) with e-commerce giant Amazon to develop a payment solution for customers and sellers.

The partnership with PayPal will not only help in international trade but also facilitate overseas funding for the government ‘Clean Ganga’ and ‘Swachh Bharat’ programmes.

The agreement with Snapdeal will allow State Bank of India (SBI) to roll out a capital assistance programme for sellers using the online retailer’s platform. If their products are on Snapdeal, manufacturers will get a collateral-free loan of Rs 1 crore; traders will get Rs 25 lakh. Women entrepreneurs will also get a concession of 0.25 per cent on interest rates for the loans.

Arundhati Bhattacharya, chairman, SBI, said:  “The bank would offer interest rates between 11.35-13.35 per cent to SMEs under the scheme, and offer concession of 50-100 basis points on additional collateral, said Arundhati Bhattacharya, chairman, SBI.

The strategy to tie-up with e-commerce sites also highlights the bank’s new strategy to keep in check the non-performing assets (NPA) in the SME sector by giving loans to sellers with good market access.

“This kind of arrangement helps in NPA management through better marketability of the products. We are using different platforms to give loans, catering to the SMEs which sell, which have the ability to produce quality products,” she said.  

At the end of third quarter of FY15, SBI’s SME portfolio was close to Rs 170,000 crore. Snapdeal has nearly 150,000 traders in its platform. Snapdeal aims to have 1 million sellers on its platform in three years.

SBI will utilise Snapdeal’s data analytics to verify the credit worthiness of sellers.

“This capital assist program will ensure that small business get capital easily with an attractive interest, the more they will be able to borrow more they will sell,” said Kunal Bahl, founder of Snapdeal.

Under the deal with PayPal, SBI debit cardholders can use PayPal when buying products from overseas websites, and gaining access to PayPal’s secure payment solutions. Also, PayPal and SBI will join hands to offer PayPal’s payments solutions to SBI’s MSME customers, who can reach PayPal’s 165 million active accounts globally.

“Through this partnership, we are also looking at the e-governance plans of the government, like the eVisa project for 145 countries. Also, there are expectations of many transactions for initiatives like clean Ganga and Swach Bharat mission. We are making a pitch for facilitating such transactions.” said B Sriram, managing director, SBI.

“It is expected that by 2025, the spending in emerging markets will reach $30 trillion. We see the partnership with SBI as a long term strategy,” said Vikram Narayan, managing director and country manager (India), PayPal.