In order to meet the financial requirements of small enterprises, Rohit Arora, CEO, and Co-Founder of Biz2X has urged that the government establish a specialized SME digital bank.

On February 1, Finance Minister Nirmala Sitharaman will deliver the final complete budget before the 2024 general elections in the Lok Sabha. She is anticipated to make a number of announcements to stimulate the economy.

According to Arora, small and medium-sized enterprises consistently struggle with a lack of financing, and it is time for the government to establish a specialized bank to meet their needs.

A variety of services, including business CASA accounts for transaction banking, the processing of invoices and payments, correspondent banking, SME credit, trade financing, and other business financial services may be offered to MSMEs by SME digital banks, according to the speaker.

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Financial institutions may provide their small and mid-size business customers with a tailored online loan experience using the turnkey worldwide SaaS platform known as Biz2X.

Arora also emphasized the possibility of such a bank having a unique portfolio of revenue-linked credit instruments that would cater to the needs of MSMEs and assist in diversifying SME credit in contrast to the current system of collateral-based financing, which limits the very viability of running a small business.

Such banks, according to him, can process loan applications and disbursements for SMEs more quickly due to their entire digital nature, supported by cutting-edge data analytics and technology-based decision-making.

“The existing system of portfolio mapping and underwriting requires extensive paperwork and many bank visits, making it a laborious and time-consuming procedure. With the help of digital banking, small companies’ credit demands will be met via faster loan processing, less risk, and faster scaling “added he.

Given its immense economic potential, he said that several sizable sovereign institutions, pension funds, international organizations, as well as sizable Indian private equity companies, desire to invest in such a project.

More than 11 crore employment is created in India each year by the 6.3 crore MSMEs (Micro, Small and Medium Enterprises).

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