GST and bank scams such as the Nirav Modi scam impacted the cash flow of SMEs and increased non-performing assets (NPAs) in the lending industry, according to CoinTribe Co-Founder Amit Sachdev.

CoinTribe is a Gurgaon-based online loan disbursement platform that provides quick and easy collateral-free loans to small businesses and individuals.

"The problem with GST, which everybody and SMEs faced over last month, was that a lot of working capital of SMEs was blocked for a variety of reasons. For people to claim GST refunds, the returns have to match. If any of us make a mistake then one cannot reclaim the refund. Because of the technical glitch like this, a lot of SMEs will not claim GST refund and their working capital was stuck for a long time," he said.

He added, with scams such as Nirav Modi scam a lot of banks have started reducing their Letter of Undertaking (LoU) limits leading to cash scarcity for SMEs as their working capital requirements have become larger. Because of the temporary issues and working capital getting stuck many SMEs were not able to pay their loans.

"A lot of our customers who have taken a loan are unable to pay. Some of the accounts have become NPAs as they don't have the cash to pay their EMI," he said.

"NPAs have increased all over the industry by around 2-2.5 percent but we have controlled ours through various steps. We have around 1.5 percent NPAs."

Recently, the government did a huge drive to ensure there are no technical glitches and GST refunds are processed smoothly.

When it comes to risk assessment of small businesses for disbursing loans, Sachdev appreciates GST as it is a reliable source to check their health. He said, "Financial statements of small businesses are not much reliable but nobody can tamper a bank statement or the GST as they are third-party source. Additionally, one can have a lot of rich data."

The company has been recently garnered funding of $10 million from Sabre Partners in Series B.

"We are making a lot of investments in our technology platform and also we have are applying for an NBFC license. We will leverage more data science, machine learning into our algorithm," he said.

The company's lending partners include Axis Bank, Yes Bank, RBL Bank, DBS, SMC Capital and others.

Source : Moneycontrol

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