With GST making it vital for SMEs to upgrade IT infrastructure, banks are stepping in to lend a helping hand.

Banks like Indian Bank, Canara Bank and Lakshmi Vilas Bank are releasing working capital loans for SME clients. Others like Bank of Maharashtra and ICICI Bank are providing them their own readymade SaaS-enabled platforms for easier GST compliance.

“Our GST soft loan is given at a competitive rates that is several basis points lower than regular loans for our SME clients. We expect they’d need to buy computers, billing machines, hire tax consultants. Many of these smaller industries, ancillary units have never had digital records — its been only manual record keeping before GST. So budgeting for such costs, we are giving these loans up to Rs 5 lakh,” said Kishor Kumar Kharat, CMD, Indian Bank

Online lenders are also trying to tap into the post-GST market.

B2B financing platform for SMEs OfBusiness said it has already witnessed close to 50% of the SMEs on their platform applying for an upward revision of their existing loan.

“We are looking at a 30% month-on-month growth. Lending reacts well to change, especially ones that spur growth sentiments. With GST, businesses, manufacturers, logistics guys turning bullish all their growth needs capital,” says Asish Mohapatra, CEO and co-founder, OfBusiness

“SMEs don’t stock that much and they borrow mostly for funding receivables i.e., growth. With indirect tax boundaries going away, you expect the SME growth engine to take-off, and hence more borrowing,” he added.

Working capital requirements are bound to increase for SME clients, say bankers. “We are not offering a separate loan product. But, SME clients have the option to tap their existing lein,” says A J Vidyasagar, head, retail, Lakshmi Vilas Bank.

Both ICICI Bank and Bank of Maharashtra have GST payments enabled on their website, via mobile banking and at the branch. With regard to special loans to cope with GST, Bank of Maharashtra has provisions made under its SME & MSME loans for upgradation of technology and business processes.

Source: Times of India