1. Transforming the way SMEs fund their growth – The Digital Way

2. India SME Landscape

3. India’s SME sector is growing at a robust rate
Real engine of India’s growth
No. of Enterprises in sme* sector
(In mn)
Nearly 60 mn Non agricultural SMEs across Manufacturing, Trading and other services
Contributes nearly 30% of India’s GDP
45% of India’s manufacturing output
40% of India’s total export
Outperformed IIP and GDP over the years
Provides employment to 106 mn people
Govt. is focused on creating a business friendly
atmosphere to promote entrepreneurship 60 49 41 36
2007
2010
2014
2018
Gross Value added by sme Sector
(In $ bn)
Have talked about the same in the next slide: The total sme demand in 2018 ~45 lakh crores  25 lakh crores met through formal channels, 20 lakh crores (40%) is done through the informal sector
Source : Ministry of Micro, Small and Medium Enterprises Annual Report
*Msme: Micro, Small and Medium-sized Enterprises

4. Challenges faced by SMEs to avail credit

5. Largest funding gap is in the Micro SME Sector
Common Challenges Faced by SMEs
Financial Institutions have strict collateral requirements
Key Growth Constraint for SMEs
28%
24%
22%
Lack of infrastructure
29%
Evaluate credit using traditional metrics - Hence Negative bias
Inadequate finance
40% of SME lending is still done through informal sector
Lack of managerial competence
Obsolete technology
Scattered base across geographies results in:
High cost structure for coverage in traditional ways
Inadequate Information if dependent on traditional matrices
Largest funding gap is in the Micro SME Sector
(In $ bn)
The chart shows the gap in funding the sme sector gets from the informal channels. Of the total sme credit demand of Rs. 45 lakh crores, 25 lakh crore is met through formal channel and 20 lakh crore is met through informal channel 88 58 52
Timely availability - Longer turn around time to evaluate / process the loan – Hence, borrow through informal channels resulting in higher cost of borrowings
Micro
Small
Medium
Source: IFC – sme finance in India 2012

6. Government initiatives in support of MSMEs
Quick loan access- Government launches quick loan access scheme for up to Rs 1 crore for MSME sector.
This is an in-principle approval through a loan sanction portal in just 59 minutes without visiting a bank
Interest concession- 2 % interest subvention for all GST registered MSMEs, on fresh or incremental loans.
For exporters seeking loans on pre-shipment & post shipment, rebate has been increased from 3%- 5% 
Loan option- Loan option for GST registered firms will now be available through the GST portal itself.
Credit Guarantee Scheme- A fund  had been set up to provide Guarantee for the credit facility extended to MSEs by Banks & NBFCs to encourage lending to MSEs. Govt. recently tweaked it’s norms to include more entities under the Guarantee cover.

7. Way Forward to Overcome Challenges

8. Changing the Way SME’s Avail Funding
Technology Based Online Assessment for Loan Requirements
Simplifies Process – Non Conventional Process – Algorithm based
Geography Reach – Location and Bottom of Pyramid
Removes Bias
Ensure Timely availability of Finance.
Corporate or OEM Based Tie up – Ecosystem Support
Use of Block chain tools for efficient Supply Chain tie ups.
Cash flow based lending – not collateral based
Advisory Services to SME’s
Co Lending Models with Fintech Companies.

9. Digital Lending by Tata Capital

10. Retailers / Sub- Dealers
Tata Capital in Digital Space
Tata Capital is moving towards implementing the Block chain Fundamentals by:
Integrating its internal platforms with the external stakeholders
Fully managing digital assets in a trusted, traceable, automated and predictable way
Digitalizing has enabled us to:
Process 60% faster sanctions through parameterized evaluations
Sanction Loans with upload of documentation or flow based approach up to Rs. 50Mn
Cover Larges Geographical Area with little constraints while processing of loans
Enter the next leg of supply chain funding i.e. sub-dealers and retailers and Manufacturers
Suppliers
Corporates
Dealers
Retailers / Sub- Dealers

11. Straight through processing
Customer Application
A user friendly customer portal for self service.
This is backed up by an assisted journey through our dedicated call centre
Automation of data
Integration with GST, ITR and Udyog Aadhar
Integration with Data Analytic Platforms for Loan Proposal assessment
Credit assessment & Sanction
Real-time sanctions through scorecard based underwriting
Login to sanction process is 100% paperless
Post sanction & servicing
EWP portal for seamless transactions and account review
SOHAM mobile app for account management on-the-go

12. Tata Capital Product Offerings for MSME sector
CUSTOMER
Post Shipment
Pre Shipment
Receivable discounting
Purchase Order funding
Channel Finance for Tier II
Working Capital Loan
Channel Finance
GST backed Loans
Per component based- pay as you use.
Term loan/Equipment Loan
WCDL

13. Tata Capital – Product Offerings
Channel Finance
Debt Syndication
Special
Products
Short
Term
Invoice Discounting
Structured Investments
Purchase Order Funding
Equipment Leasing & Financing
Working Capital Demand Loan
Promoter Funding /
Loan against Securities
GST backed WCDL loans
Pre-Approved Loans
Term Loans
Project Loans
Letter of Credit
Equipment Leasing
Supplier’s Credit
Non-fund
Based
Long
Term
Equipment Finance
Construction Equipment Finance

14. Thank You!!