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Mumbai,Sumit Moitra: As small and medium enterprises latch on to the e-commerce bandwagon to reach out to global buyers, State Bank of India is ready to finance their ambitions.
Arundhati Bhattacharya, chairman, SBI with Kunal Bahl, CEO, Snapdeal
The nation’s largest banker on Thursday joined hands with Snapdeal, country second largest e-commerce player and Paypal, world’s leading payment solution entity, to finance lakhs of small businesses helping them scale up and tap customers both within and outside the country.
“There is a huge untapped market for very many beautiful things but the producers can’t scale up and faces problems of liquidity which we would be addressing,” said Arundhati Bhattacharya, chairman, State Bank of India.
Under the deal with Snapdeal, SBI would provide loans to SMEs, mostly without any collateral, up to a threshold loan amount of Rs 1 crore at an interest rate of around 11.35% with 25 basis points rebate to women entrepreneurs.
SBI has a SME client base of 9 lakh accounts with loan book of Rs 167,900 crore as on December-end.
Snapdeal, just three years old, is getting there fast. It has now 1.5 lakh sellers on its platform and chief executive officer Kunal Bahl wants to reach 10 lakh in the next three years.
Under its Capital Assist programme, Snapdeal has been joining hands with financiers, big and small, since August 2014.
“The biggest problem for the SMEs has been marketing and distribution. But as we solve those problems by offering them the e-commerce platform, there is a new challenge in the form of lack of liquidity,” Bahl said.
“As these small business gets funds from the formal banking system at far cheaper rates, their profitability rises and they can pass on some of the benefits to consumers,” Bhattacharya said.
Beyond providing accessing to funds, Snapdeal is now creating an ecosystem of sellers signified by a recent series of advertisements featuring actor Amir Khan.
“From an entrepreneur seeing huge demand for handy blood-sugar monitors in rural areas, to the artisans of Madhya Pradesh, with whom we have just tied up, we are building this ecosystem of small businesses,” he said.
Beyond marketing support, Snapdeal is holding hands of these small businesses in many ways: leasing out warehouses in a no-profit-no-loss way, creating mobile apps and providing analytical support to determine creditworthiness and understanding their position against competition even creating professional product catalogues.
SBI’s tie-up with Paypal is targeted to help such small business reach out to foreign customers using the payment major’s global presence.
“When a customer in a far away country sees an exotic handicraft item from India but scared of dealing with an unknown entity, presence of PayPal would bring in the trust element,” Vikram Narayan, MD and country manager, PayPal India, said, while signing a similar MoU with SBI during the day.