Challenges in Repayment System Prompt Lenders to Call for GeM Sahay Reforms

ENA MSME 2024-11-04 13:15:48 New Delhi, Nov 4 (KNN) Lenders who have provided loans to small businesses through the Government e-Marketplace (GeM) are pressing for enhanced repayment channels to ensure sustainability, several industry sources revealed to ET. GeM, a digital procurement platform created in 2016 for government ministries and agencies, launched GeM Sahay in 2021 to enable cash-flow-based lending for MSMEs (Micro, Small, and Medium Enterprises) against government purchase orders. This initiative, a pilot project under the Open Credit Enablement Network (OCEN), has disbursed over Rs 23 crore to more than 14,000 sellers as of January 2024. However, despite the portal's success as a lead generator, lenders say it has yet to facilitate a structured repayment system. When lenders disbursed money, they also needed repayment routed through GeM. This did not happen, causing some accounts to turn delinquent, an industry executive explained, noting the challenges posed by fluctuating outstanding payments. Sharad Sharma, co-founder of iSPIRT, which incubated OCEN, acknowledged the iterative nature of pilot programs like GeM Sahay. Each pilot has provided insights for refining our models, Sharma said in an email, adding that GeM Sahay 2.0 is expected soon. This new version aims to improve digital financing for MSME suppliers through a competitive auction model, supported by a network of loan agents and lenders. The impending launch of GeM Sahay 2.0, backed by Perfios Software Solutions as the new technology provider, has raised expectations for a more robust system. Ravi Modani, CEO of NBFC 121 Finance, confirmed that GeM Sahay 1.0 has been discontinued, with the updated version nearly ready for rollout. Improving compliance, onboarding, and lender integration will be critical for the network to gain traction, said Deepak Sharma, former digital chief at Kotak Mahindra Bank. He stressed that OCEN's cash-flow-based lending and invoice discounting are promising but require adoption by lenders familiar with these products. Currently, five lenders, including both public and private banks, are active on OCEN, largely from the private sector. Efforts to reach GeMs CEO for comment went unanswered at press time. (KNN Bureau) 39791 https://knnindia.co.in/news/newsdetails/msme/challenges-in-repayment-system-prompt-lenders-to-call-for-gem-sahay-reforms 2024-11-04 13:15:48 knnindia.co.in Challenges in Repayment System Prompt Lenders to Call for GeM Sahay Reforms