Bengaluru, NFPost: State Bank of India (SBI) is set to invest $100-150 million (Rs 750-1,000 crore) and leverage its YONO platform to set up a business-to-business (B2B) e-commerce marketplace for micro, small and medium enterprises (MSMEs). The country’s largest lender hopes this will also help it better manage financing of small businesses.
The plan, which has been cleared by the bank’s executive committee, entails getting MSMEs on to the platform and providing funds based on the transactions that take place. The bank is hoping that it will not only help assess risk better but will also give it greater grip over receivables.
“We are engaging with the MSME ministry to create a marketplace for SBI customers to sell their products, called Bharat Craft, which is going to be an e-commerce and technology driven platform. It is in the initial stage of taking shape,” said SBI MD Challa Sreenivasulu Setty. SBI is looking to design the platform using the Alibaba and Alipay model, where transactions and payments are routed through it, a source said.
YONO is currently used by the bank to hawk its products and as an e-commerce platform. It is expecting regulatory clearances to come through as the B2B marketplace is not going to earn it revenue but help with its banking business.
Among banks, HDFC Bank already has an e-commerce platform SmartBuy. The bank uses the platform to provide merchants a marketplace. In return, the merchants extend a discount to customers of HDFC Bank.
Last year, MSME minister Nitin Gadkari had proposed two platforms for small businesses, including one for B2C, and suggested that the Government e-Marketplace (GeM) take up the job. But the plan did not find support, resulting in SBI stepping in on the B2B front.
At a webinar organised by Brickwork Ratings, SBI’s Setty said state-run lenders are working with the ministry to provide hand-holding support to the MSME sector, which has received special attention in recent weeks with the government announcing a series of steps, including guarantee-based lending, to help them navigate out of the Covid-19 crisis.
So far, lenders have sanctioned loans amounting to Rs 1.1 lakh crore backed by government guarantee, Sidbi deputy managing director V S V Rao said, adding that if the Rs 3-lakh-crore limit was exhausted, a fresh look at the industry’s needs will be taken.