The SME Finance Forum, a dynamic platform dedicated to advancing SME financing, launched its conference in Mumbai on Tuesday. This year’s theme is “Digital Ecosystems and the Future of SME Finance.” The conference is jointly hosted by SIDBI and the Indian Bank’s Association (IBA). Dr. Bhagwat Karad, Minister of State for Finance, emphasized that India currently has approximately 6.3 crore MSME enterprises, which have created around 11.1 crore employment opportunities. MSMEs contribute approximately 30% to the GDP, with an annual growth rate of 10%. “The government of India under the leadership of PM Narendra Modi has been proactive in removing hurdles for the SME sector, and together with the banking sector, we strive to make financing easily accessible to fuel the growth of these vital enterprises,” he added.
During the fireside chat session themed digital ecosystems for the future of SME finance and financial inclusion, Nandan Nilekani, Co-founder and Chairman of the Board, Infosys, said “SMEs are the biggest beneficiaries of Digital Public Infrastructure (DPI). India is building public trails to access credit and market benefiting SMEs. More than 50 million merchants are opting for digital mode of payment. Digitization helped us generate balancesheet quicker as all the financial details like invoices, transactions, tax credits are easily accessible. Digitization also reduces turnaround time to get loans. In the next 5 years at least 50 countries are going to implement DPI.”
Dinesh Khara, Chairman, SBI, who joined virtually in the session titled Unlocking the potential of digital platforms for SME financing said, “In the last ten years, we have witnessed a significant transformation in our bank. There has been a prominent shift from a collateral based lending model to a data-based lending, which has further assisted us in reducing the bank’s overall operational costs. Digitalization has also helped vendors in making faster and more convenient payments, streamlining the MSME loan process. Additionally, digital platforms have been instrumental in catering to the needs of SME customers and creating value for them.”
Shalini Warrier, Executive Director, Federal Bank said during that same panel, “In the past, banking operations were primarily conducted manually. However, in recent years, a significant evolution has occurred, with digital technology taking the lead in the sector. One of the notable advancements is the convenience of online payments through QR codes provided by UPI apps. Nowadays, a substantial portion of transactions occur digitally on a daily basis, surpassing other traditional payment methods.”
Thampy Koshy, CEO, ONDC, Matthew Saal, Principal Industry Specialist, IFC, and other eminent speakers discussed the role of marketplaces in the SME finance ecosystems. Key issues faced by the MSME sector in terms of flow of credit, ease of doing business and market facilitation were addressed and solutions through use of digital technologies were also mentioned.
Six SME finance innovators demonstrated their technologies and explained their potential to change SME finance. The fintech invited to pitch were: 360tf, Builder.ai, CredAble, ShopUp, Topicus, Uplinq Financial Technologies
Sivasubramanian Ramann, Chairman and MD, SIDBI, said, “With India taking the presidency of the G20 for the first time, the country’s views, and outlook on the MSME sector is of significance for the world. The strides made by the Government of India in developing a robust digital infrastructure and the consequent digital innovation by various players in the MSME credit domain needs to be discussed, encouraged and also celebrated.”
Qamar Saleem, Incoming SME Finance Forum CEO, said, “We have more than 700 executives representing more than 70 countries and 250 institutions gathered here. It is also fitting that the event is hosted by India which is at the cutting edge of digital infrastructure and innovations steering SME finance. SME finance Forum and IFC remain committed to supporting the private sector globally in playing a catalytic role to support SMEs as they drive economic growth and create jobs”