MSMEs will play a key role in reviving India’s economic growth: Amitabh Kant, Niti Aayog
In his keynote address at Facebook India's launch of 'Small Business Loans Initiative,' Kant, CEO of Niti Aayog, discussed digital transformation as a catalyst for India’s development story
Facebook India yesterday announced a new program, the ‘Small Business Loans Initiative’, to help small and medium businesses (SMBs) that advertise on Facebook to get quick access to credit through independent lending partners. Indifi is the first lending partner that Facebook has tied up with and the program is built with the potential to bring more partners on board. The goal of the initiative is to make business loans more easily accessible to small businesses and reduce the credit gap within India’s MSME sector.
India is the first Facebook country where this program is getting rolled out. The program is open to businesses registered across 200 towns and cities of India.
The announcement came at a virtual event - 'Enabling MSME Growth through Financial Inclusion’- hosted by Facebook India in partnership with the Federation of Indian Chambers of Commerce & Industry (FICCI). The event also saw Niti Aayog’s Chief Executive Officer, Amitabh Kant address the same.
"MSMEs will play a significant role in reviving India’s economic growth and achieving its vision of becoming more self-reliant,” remarked Kant.
According to the ‘Future of Business’ survey conducted by Facebook in collaboration with OECD and the World Bank last year, almost a third of operational SMBs on Facebook in 2020 said that they expected cash flow to be one of their primary challenges. Getting access to timely credit is particularly challenging for micro and small businesses that have just started out and might not have a long credit history.
High and floating interest rates might deter a lot of small businesses from applying for loans. Through Facebook’s partnership with Indifi, small businesses that advertise with Facebook can get loans at a predefined interest rate of 17%-20% per annum.
The program will also enable small businesses to apply for loans without collateral through a quick online application. They will not be charged any processing fee by Indifi who will also disburse the loan amount within five working days after documentation formalities are done. Many small businesses face challenges in securing loans of lower ticket size as they are not viable for many lenders. Through this program, they can get loans between Rs 5 lakh and - Rs 50 lakh.
Kant said, “Digital transformation will act as a catalyst for India’s development story going forward. “ He noted that access to finances will be crucial to this transformation. “I’m happy to note that India is the first country where the company is launching such an initiative. Facebook's Small Business Loans initiative is a big step in the right direction,” he said.
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