Indian Economy News

SBI ties up with Snapdeal, PayPal to boost business with new generation sellers

Kolkata: India's largest lender State Bank of India plans to boost micro small and medium enterprises (MSME) businesses by financing new generation sellers using Snapdeal e-commerce portal and facilitating cross-border payments of small units through PayPal's payment gateway, when corporate and industrial credit is yet to show any significant growth momentum.

SBI has entered into two tie-ups in a single day, acknowledging the fast-changing eco system of modern and digital banking and e-commerce space.

The day's first deal was with PayPal which will allow SBI debit card holders to use a digital payment gateway for buying products from foreign websites and also enable MSME customers to access a secure payment solution. SBI's partnership was with PayPal which is present in 145 countries is first of its kind in India.

SBI has also entered into an arrangement with Snapdeal for financing its sellers. E-commerce space is growing very fast and meets the aspirations of the next generation of customers and small businesses.

"Prime Minister's dream of `Make In India' and digital India will get fulfilled by such arrangements," SBI chairman Arundhati Bhattacharya said, after signing the MoU with Snapdeal.

Snapdeal has one lakh sellers on board as of now for SBI to pick and choose for financing. Their online sale performance would be a ready reckoner for the lender to initiate dialogue with the sellers willing to take finance and scale up business.

The bank plans to give maximum Rs 1 crore loan without collateral to manufacturers and up to Rs 25 lakh loan without collateral to traders. The interest rate will vary between 11.35% and 13.35% a year. Women entrepreneurs will get 25 basis points discount on rate, Bhattacharya said. A 100 basis points in one percentage point.

Snapdeal chief executive officer Kunal Bahl said that the financing arrangement with SBI would help its sellers grow in scale and this in turn, will boost its volume of business. Snapdeal gets a commission from the sellers for every product they sale.

SBI has nine lakh MSME customers with a loan book of Rs 1,67,900 crore as on December 2014 and it now expects to grow this vertical further without hampering asset quality. SBI's MSME business accounts for 20% of the market.

"We understand the government's focus on the MSME and believe PayPal has a strong role to play in the 'Make In India' initiative," said Vikram Narayan, PayPal's managing director and country manager in India.

Just a day before, SBI joined hands with Amazon to make e-commerce payments seamless for buyers and small businesses.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.