Credit platform for MSMEs takes shape

A countrywide pilot of the newly-developed credit protocol infrastructure for the democratisation of credit will start within a fortnight, said a think tank, Indian Software Products Industry Round Table (iSPIRT), that developed the platform.

“Countrywide pilots will be underway in a few weeks and these will involve multiple banks and thousands of MSMEs,” said Sharad Sharma, co-founder, iSPIRT.

The credit protocol infrastructure, known as Open Credit Enablement Network (OCEN), will mediate the interactions between loan service providers, usually fintechs and mainstream lenders, including all large banks and NBFCs. Meanwhile, private equity and venture capital players, angel investors, high networth individuals and others will also could be part of this exercise as investors, according to Mr. Sharma.

To start with, iSPIRT will work with lenders such as the State Bank of India.

The architect of Aadhaar Nandan Nilekani, who is involved in the project, said, “OCEN is a common language for lenders and credit seekers. With this, credit will become more accessible for a large number of entrepreneurs and small businesses in the country.”

On the regulatory backing that was required to get something like this established in the country, Mr. Sharma said, former SEBI Chairman U. K. Sinha MSME Committee had recommended this architecture a year ago and the Government of India also announced its in-principle acceptance of those recommendations.

The committee in its report suggested new technological interventions for MSME lending, said Sharma, after it observed that due to the lack of credible information on the functioning and performance of the MSME units, MSMEs have been found to be deprived of institutional credit.

The committee had then looked into areas of capacity building, policy changes and financing needs to unlock the potential of the MSME sector. Some 63.38 million MSMEs account for about 45% of manufacturing output, over 40% of exports, contribute to over 28% of the GDP and employ about 111 million people.

Our code of editorial values

This article is closed for comments.
Please Email the Editor

Printable version | Sep 25, 2021 10:07:39 PM |

Next Story