YES Bank to give loans to MSMEs based on their GST returns, bank statements


MSMEs have an integral role to play in the economy as it employs scores of unskilled and semi-skilled people. As a matter of fact, the MSMEs base in India is the second-largest in the world after China and known to contribute majorly to output, and employment export in the economy.

According to the ‘MSME at a Glance’ report published by the Ministry of MSMEs, this sector comprises of 36 million units and provides employment to over 80 million individuals across the country. Furthermore, the MSME Sector is known to produce over 6,000 distinct products thus contributing to about 8 percent of GDP in addition to the 45 percent to the total manufacturing output and 40 percent to total export output from the country. MSMEs also help in increasing the output of the manufacturing sector while also extending support to other industries by way of supplying raw material, basic goods, finished parts as well as components.

YES Bank: Quick Overview

Yes Bank is one of pioneer private sector banks helping small businesses avail easy and hassle free Business Loans.

Indeed in April 2018, YES BANK, India’s fourth-largest private sector bank, announced the launch of ‘Smart Edge’. In line with its ethos of endeavouring Responsible Banking, YES BANK has always been committed to supporting the growth of the MSME sector by giving it a much-needed boost and setting it up on the path towards sustainable growth. YES BANK’s role in supporting and strengthening the MSME cause has been further reinforced by the fact that it has been awarded and recognized as the ‘Best Bank for Small and Medium Enterprises (SMEs) – India’ at the Asiamoney Country Awards 2018. Asiamoney is widely regarded as one of the world’s leading financial institutions. In addition, till date, the bank has managed to raise an aggregate funding to the tune of USD 415 million in partnership with OPIC and Wells Fargo as a way of extending support to MSMEs & women entrepreneurs.

In 2018, YES BANK had launched its ‘YES GST’ initiative in a bid to assist MSMEs to understand the impact of the new GST tax system and notify them about changes as well as prepare them for seamless migration. In that regard, YES BANK has conducted 112 awareness workshops across the country helping and supporting nearly 9,500 MSMEs through the initiative.

The bank also conducted a survey for over a period of 5 months which covered over 2,700 MSMEs across 20 industries in India. The purpose of the survey was to analyse the impact of digitization on Indian MSMEs. As per the findings of the survey, it was revealed that while 60 percent of MSME respondents were digital users only 5 percent had fully adopted digital technology. Also, the absence of skilled manpower and a lack of know-how were attributed as the primary challenges faced by MSMEs in their pursuit of digital adoption.

YES Bank – Smart Edge Initiative

Described as the first-of-its-kind lending model for Micro, Small and Medium Enterprises (MSMEs), Smart Edge is a YES GST initiative which eliminates the need for businesses to furnish financial statements. Besides, credit appraisal is done as per the data-points extracted from GST returns as well as the operative bank accounts of the MSMEs.

As per this new initiative, an MSME will be able to secure YES Bank Business Loan to meet working capital requirement from anywhere between Rs. 1 to 3 Crore in the form of Overdraft (OD), Letter of Credit (LC) and Financial Bank Guarantees – based on their annual turnover & backed by their GST returns. By eliminating the requirement for any additional assessment in the form of balance sheet or bank statements, this facility ensures credit will be processed in a simple, hassle-free, and faster manner for all their customers.

Additionally, the program will have scorecard running in the background that will be used to analyse credit indicators from both GST returns and operative bank accounts individually while also taking into account the interplay between the two as well. Depending on the score which has been generated, the bank will determine the collateral cover requirement – starting from 85 percent.

Needless to say, Yes Bank has been at the forefront of facilitating the best possible financial solutions to the MSME sector and their ultimate goal is to encourage the growth of this crucial industry – the lifeblood of Indian economy – by supporting them in their quest to be sustainable and competitive.

Application Process

In order to avail loans under this programme, MSMEs need to apply through any of the bank’s branches or alternatively, by raising a request on the Bank’s website. Next, a YES BANK representative will look into the request and accordingly, get in touch with the applicant. Documentation which MSMEs will need to submit includes GST returns along with operative bank account statements for the previous year for purpose of assessment. Further, hygiene documents such as Know Your Client (KYC) will also be required to be submitted in order to avail of this facility. Any collateral which is acceptable as per the bank’s policies will be taken as security for the loan. In most cases, the facility can be availed as a LAP against residential or commercial property.

The amount which has been sanctioned by the bank can be utilised by the MSME either fully or in parts. The bank is targeting a disbursement of Rs 100 crore through the YES MSME portal for the financial year 2019-20. The bank’s total exposure to MSMEs as on March 31, 2019, has crossed Rs. 42,000 Crore.

YES Bank – Click OD Facility

In June 2019, YES Bank launched a unique offering called the Click OD (overdraft) facility for the bank’s existing MSME customers. As per this facility, MSMEs can obtain an unsecured OD up to Rs 10 Lakh digitally– which will be disbursed through the bank’s MSME portal – without the need for any additional documentation. This salient end-to-end digital offering is a unique scheme which will be offered only to selected customers after taking into consideration their account conduct and credit history. Accordingly, the customer will be needed to login on the portal and follow a few simple steps following which the limit will be disbursed to them in just a matter of a few clicks.