SBI to offer loans based on UPI transaction history

Taking a loan is often seen as a long and cumbersome process. But the State Bank of India (SBI) has launched a new and simpler facility for its crores of customers, under which loans can be given based on information available on UPI. This means the bank will check a customer's UPI transaction history to grant a loan. This was disclosed by SBI's senior official and Managing Director, Ashwini Kumar Tiwari.

This loan facility is being brought in especially with small businesses in mind. Tiwari said that if a small business has regular sales and receives payments through UPI, these digital transactions can be used as an indicator of the business's sales. For businesses that do not have GST registration, SBI is preparing a new UPI-based system to assess their loan eligibility.

Tiwari further said that the bank has already found a way to lend to businesses that are registered under GST. In such cases, a loan can be given within just 10 minutes. Over the past 18 months, the bank has disbursed loans worth Rs 1 lakh crore using GST and PAN data. But businesses without a GST number face difficulty, and in such cases alternate data proves quite useful.

On UPI payments, Tiwari said that lending banks often do not have clear visibility into where the money is actually going. However, the bank receiving the payment and the third-party payment app processing the transaction have this information. With the customer's consent, a bank can use other sources such as UPI payment data and data from telecom companies in its models to assess loan eligibility. Tiwari expects that with this new data, SBI will be able to lend to small businesses, easing the credit-related difficulties faced by small traders.

If the scheme succeeds, it could make it easier for small shopkeepers, traders and other small businesses without GST registration to get loans from banks. Businesses that operate regularly and have a solid history of digital payments through UPI stand to benefit the most.