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BoB signs MoU with 10 SMEs to support micro-entrepreneurs

7/20/2018

New Delhi, Public sector bank, Bank of Baroda (BoB) on Friday inked Memorandum of Understanding (MoUs) with ten small and medium enterprises (SMEs) to improve access to finance from early to growth stage. The MoUs were signed during the Micro-Entrepreneurs Conclave, 2018 to commemorate its 111th Foundation Day.MoUs were signed with companies ranging from segments as diverse as e-commerce, logistics, service providers and traditional small businesses. Speaking on the occasion Bank of Baroda MD and CEO P S Jayakumar said, “We are committed to working jointly with various partners to support MSMEs and Start Ups. We have entered into these MOUs with a view to enhance our foot print in delivery of products and services in MSME eco-system. This is an endeavour to simplify operational processes and to improve access to finance for MSMEs from early to growth stage.” "The bank throughout FY18-19 will continue to launch various initiatives in this direction that will support e-Commerce and their derivative segment,” Mr Jayakumar said. Speaking on the occasion, bank’s Fintech and New Business Initiatives Head Akhil Handa said, "We have taken a lead to support Start-up India and 'Stand-Up India' schemes by signing MoUs with ten companies. Micro and small enterprises contribute approximately 31 per cent to India’s GDP, 45 per cent of exports and provides employment to over 100 million. Rapid advances in information technology have given rise to new business opportunities in the MSME segment, especially around organized retail, e-commerce, entertainment etc. and their derivative segments. This has resulted in emergence of “Twin-Tracks” in the MSME segment; one comprising of old economy enterprises and the second comprising new age economy. The challenges for the old economy lending are thin balance-sheet, non-availability of authentic data and lack of collaterals where mitigation is done through ring fencing of cash flows, corporate tie-ups, individual/portfolio guarantees under MUDRA, Stand-Up India and CGTSME schemes. The new economy enterprises on the other hand require a paradigm shift in the process of credit underwriting. The business models of these companies, calls for development of credit models based on turnover, cash flow, digital data points and alternate data as compared to the earlier practice of balance sheet based lending. As one of the leading Banks in the country, Bank of Baroda has been in the forefront in ensuring smooth flow of credit to MSME segment through various initiatives. The Bank has developed structured products and realigned processes that enable MSME to access credit seamlessly. As on March 31, 2018 the Bank has financed about 5.37 lakh micro entrepreneurs with aggregate outstanding of Rs. 32,766 crore.

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