PSB Alliance enters supply chain financing, ties up with Veefin Solutions

The PSB Alliance, an entity floated by 12 public sector banks in 2022, is entering the supply chain financing to primarily help small businesses, and aims to tap 5 per cent of the total credit market.

The overall bank credit rose 14.5 per cent on-year in the week ending July 28 to Rs 148.2 lakh crore.

Of this, pure-play supply chain finance from banks is only around Rs 1 lakh crore and the alliance over the next 3-4 years seeks to increase to at least 5 per cent of the total system-wide bank credit. At the current volume of bank credit, the 5 per cent works out to be around Rs 7.5 lakh crore.

The PSB Alliance is promoted by 12 state-run banks with each of them owning 8.33 per cent of the equity capital. It was set up with the objective of having a common IT and business process platform, the chief executive of the alliance Rajinder Mirakhur told reporters while announcing a strategic technical collaboration with a supply chain-focused fintech player Veefin Solutions led by Raja Debanth.

Before the formation of PSB Alliance, public sector banks had another joint entity called Cordex since 2010 which used to do doorstep banking and maintain a loss data exchange for them, excluding cyber frauds.

Mirakhur said the partnership with Veefin is to deploy and operate a unified cloud-based supply chain finance ecosystem which will go live from early next year and get commercialized from early next fiscal.

Debanth said their responsibility also extends to getting clients/borrowers as the one-click platform will effectively work like a co-lending platform for these partner banks to begin with and then to be extended to NBFCs first and eventually to even private sector lenders.

Veefin will charge a fee from the lender for each loan issued against invoices/distributor finance/purchase orders, they added but refused to share the details.

Currently supply chain finance is a pain-area for banks and much more so for companies, especially those in the small and medium segments.

"What we are trying to do is to ease the entire process of getting a loan for a borrower by offering a one-stop platform from which she can now choose any of the member lenders and decide to go with the one offering her the best deal. And we want to offer this all online," Debnath said, adding currently this market is only about Rs 1 lakh crore which we want to take to around Rs 7.5 lakh crore over the next three-four years or 5 per cent of the formal credit.

PSB Alliance's strategic advisor Eric Anklesaria said the alliance is already offering doorstep banking across 100 cities now which by May-June 2024 will touch 6,000 centres/cities. "We will be adding 1,000 more centres every month."

Under the doorstep banking services, offered through banking correspondents, it offers as many as 15 services including cash delivery/pick, cheque book, statement delivery among others.

Another service it offers is the loss data exchange, he said, adding they will soon be entering wealth management, gold loans and wholesale banking among others.

Founded in 2020, Veefin is a leader in digital supply chain finance and has customers across Asia, the Middle East and Africa served through its offices in Mumbai, Ahmedabad, Dhaka and Dubai.