Strategic Evolutions in Supply Chain Financing in FY24

Welcome to the January edition of The Yubi Collective! 

India's economic landscape witnessed a paradigm shift in 2023 with the emergence of Supply Chain Finance as a dominant force. Last year, we saw a flurry of strategic partnerships, government initiatives, and technological advancements, all converging to pave the way for a future fuelled by SCF's potential.

Hence, this month, we're diving deep into the world of Supply Chain Finance and delving into the pivotal role it plays in fostering sustainable growth for Indian MSMEs, the backbone of the nation's economic fabric. 

Let’s start with all positive notes, shall we?

The Year of SCF: A Retrospective of Partnerships and Progress

Let’s go back to some of the most strategic and exciting developments that ignited the SCF world in 2023:

1. Yubi and Indian Bank 

A landmark collaboration to disburse over ₹1,500 crore empowering over 2,500 SMEs with vendor and dealer financing solutions, unlocking their growth potential within just the first quarter.

Read more: 

2. Indian Bank and Tata Motors 

Recognizing the green wave, Indian Bank and Tata Motors ₹10,000 crore partnership bolstered the electric vehicle ecosystem by offering inventory financing to Tata Motors dealers, boosting adoption and strengthening their network.

Take a detailed look here: 

3. Godrej Capital Enters the Arena 

Diversifying its loan book, Godrej Capital aimed to disburse ₹1,000 crore in micro-credit and SCF solutions, opening new avenues for India's burgeoning MSME sector.

Read more over here:

2023 wasn't just a year of private partnerships for SCF - the Indian government took center stage, championing its potential for MSME growth through several impactful initiatives.

Easier Credit for MSMEs: Boosting SCF Business

Micro, Small, and Medium Enterprises (MSMEs) are the backbone of the Indian economy, yet they often face challenges accessing credit. Recognizing the critical role of MSMEs, the RBI prioritizes their access to finance through initiatives like reduced collateral requirements and the launch of TReDS. These measures ease access to working capital, creating fertile ground for SCF adoption by MSMEs. 

Here are the top five takeaways:

• Priority Sector Lending: All MSME loans up to specific limits qualify as 'priority,' meaning banks must allocate a certain portion of their loans to this sector. This ensures greater access to funding.

• Reduced Collateral: Loans up to ₹10 lakh require no collateral, lowering entry barriers for smaller businesses.

• Trade Receivables Discounting System (TReDS): This online platform connects MSMEs with lenders to quickly convert their invoices into cash, tackling delayed payments.

• Emergency Credit Line Guarantee Scheme (ECLGS): A massive ₹5 lakh crore scheme guarantees loans to businesses, including MSMEs, providing much-needed liquidity during downturns like the pandemic.

• Credit Guarantee Scheme (CGS): Up to 85% guarantee on loans helps banks lend confidently to MSMEs, even those with limited credit history.

Industry’s Wishlist for Budget 2024: Bridging Gaps, Boosting Growth

In the run-up to Budget 2024, rural startups are strongly voicing their expectations for pivotal measures to boost the Supply Chain Finance (SCF) industry. These grassroots entrepreneurs are clamouring for enhanced support in the form of streamlined supply chains, subsidies, improved infrastructure, and easier access to finance. 

The focus, especially in sectors like agriculture, is on seeking government assistance to connect with global supply chains and simplify export processes for broader market access. The startups, such as Krini Spices, Iris Polymers, and Niyo Farmtech, are specifically looking for subsidies to improve profitability and ensure benefits reach farmers. Notably, initiatives like the Agriculture Accelerator Fund (AAF) and the National Deep Tech Startup Policy (NDTSP) hold significant weight, with entrepreneurs anticipating increased funding and support allocations to catalyze growth in rural startups and the SCF sector.

Take a closer look at: 

Yubi Steering Growth Margins in SCF with Technology 

Speaking of bridging gaps, FinTechs are bridging the financing gap by digitizing the interactions between multiple entities in the supply chain. With AI-powered technology platforms, real-time analytics, and web-based financing capabilities—fin-techs are making the entire lending process more transparent and flexible.

The plug-and-play capabilities and customer-centric tech stacks offered by fintechs have been crucial in filling the MSME credit gap in a cost-effective and timely manner.

Yubi, at the forefront of this revolution, offers cutting-edge SCF products catering to both Procurement as well the Supply side financing. This includes Vendor & Dealer Finance, Purchase & Sales Bill Discounting and Factoring among others. 

With a focus on deep-tier financing and dynamic discounting models, Yubi ensures early payments for buyers and opens new avenues for MSMEs at the bottom of the supply chains.

Closing Thoughts

This month’s Yubi Collective celebrates the dynamic landscape of SCF, spotlighting not only achievements but also the transformative potential that lies ahead. Stay tuned for more insights and innovations in the world of SCF.

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Until next time,

Team Yubi Collective