ICICI Bank, one of India’s largest private sector banks, on Wednesday announced the launch of a new working capital facility that will enable MSMEs (micro, small and medium enterprises) to get an overdraft (OD) based on the turnover reported in their Good and Services Tax (GST) returns. Christened ‘GST Business Loan’, the facility is available to any MSME, including non-customers of ICICI Bank, for up to Rs 1 crore. According to the bank, this facility brings in the improved convenience of availing quick OD facility, by doing away with the requirement of paper-intensive assessment of financial documents including balance sheets of previous years.
Further, the process for sanction of the OD is reduced to two working days. Sharing his view on the launch, Anup Bagchi, Executive Director, ICICI Bank, said,
“Since GST takes in to account comprehensive business flows, we believe that GST returns will change the lending paradigm for MSMEs with faster and hassle-free access to working capital finance from financial institutions.
He further added, “With over one crore MSMEs registered in the GSTN network, we believe that this facility will give a boost to the MSME industry as a whole and open new avenues for business expansion for them. This new proposition resonates our effort in developing pathbreaking innovations for MSME customers, thereby offering them with solutions that cater to all their business needs.“ The ‘GST Business Loan’ facility is a collateral loan that can be availed by an MSME against mortgage of residential, commercial or industrial property. The amount of the loan varies from Rs 10 lakh and goes all the way to Rs 1 crore.
To avail the loan, customers are required to submit the GST return of the past six months, with no requirement of submitting financial statements. OD is sanctioned up to 20 percent of the turnover reported in the GST returns. The bank also said that ‘GST Business Loan’ is renewable on an annual basis, depending on the repayment track record of the overdraft facility by the customer. However, ICICI Bank is not the first bank to launch this facility. YES Bank had launched a similar facility for MSMEs in April 2018.