SBI Pioneers UPI Data For Credit Assessment Of Small Businesses Without GST

Discover how State Bank of India is pioneering a new approach to small business lending by leveraging UPI transaction data to assess creditworthiness for enterprises without GST registration, promising faster digital loans.

Key Points

SBI is developing a system to use UPI data for assessing creditworthiness of small businesses.
This solution targets businesses without GST registration, expanding access to formal finance.
The bank aims to provide end-to-end digital loans within a day for these borrowers.
UPI transactions will serve as a proxy for sales data, similar to GST insights.
Customer consent will be crucial for using UPI and other alternative data like telecom information.

State Bank of India (SBI) is developing a solution to use UPI data as a proxy to assess a small business entity's creditworthiness in the absence of GST registration, a top official said on Friday. The country's largest lender is confident of providing end-to-end digital loans within a day for such borrowers, its Managing Director Ashwini Kumar Tewari said here, adding that this will help assuage concerns about such businesses being left outside formal finance.

"UPI (Unified Payments Interface) can substitute GST (goods and services tax) if regular sales are happening. We are developing a UPI solution (for businesses) without GST, and we will use that (UPI transactions) as a proxy for sales," Tewari said.

Bridging The Lending Gap For Small Businesses

The bank has been able to solve lending challenges for the businesses registered with GST, and is in a position to lend within ten minutes, he said, speaking at the annual Global Fintech Fest here. Over the last 18 months, it has written loans of Rs 1 lakh crore using GST and PAN data, which gives an insight into the cash flow of a business, he added.

However, there are difficulties in the case of businesses not having a GST number, he said, pointing out that this is where alternative data inputs become important.

Leveraging Alternative Data For Credit Assessment

Explaining "frictions" on the UPI payments front, he said the lender bank does not have any clarity over where the money is going, but the receiver bank and third-party payments app facilitating the transaction have the data. Using customer consent, the bank can establish creditworthiness by deploying models that look for UPI payments and other inputs like data from telecom companies, he said.

The bank hopes to provide small business loans using the new data inputs, Tewari said, adding that this will help solve the credit challenges for Bharat.

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