Financial institutions are an umbrella term to describe several types of institutions who are providing various services to individuals or businesses. Not all financial institutions are banks, although banks are a type of financial institution, there are others like non-banking financial institutions which provide all the typical services of banks like provide loans, facilitate investments and other financial product but they cannot accept demand deposits like savings account or checking accounts. Fintech companies leverage technology to provide banking solutions, Investment firms are engaged in asset management, Insurance Companies focus on risk analysis and mitigation.

SMBs require different types of solutions from the financial institutions such as business loans, trade finance, supply chain financing, digital payment solution, digital banking and cash management, invoice financing, equity and venture capital solutions, microfinance, insurance, neo banking solutions, supply chain and vendor financing, taxation and compliance services, green financing solution and many others.

In this blog we will try to delve into each category of financial institution providing innovative financial solutions to different small and medium businesses.

1)State Bank of India- India’s leading public sector bank. It provides specialized loan product SME loan tailored for Small and Medium Enterprises. The purpose is to provide financial support like working capital, expansion, equipment purchase. There are schemes like SME eBiz loan, Simplified Small Business loan, Stand Up India, SME smart score, SME credit card. The loan amount and criteria vary and can range from 5 lakh to 5 crores depending upon the scheme.

2)HDFC-   HDFC provides a wide range of premium banking services customized according to the need of the business such as the Smart Hub Vyapar app, no collateral loans, Letter of Credit, Digital Banking Solution and Cash management. HDFC ERGO provides a wide range of business insurance solutions such as fire insurance, cyber insurance, group health insurance, commercial vehicle insurance. Their Business Suraksha Insurance is specifically designed to cater to small businesses.

3) ICICI Bank- ICICI bank provides a bulk of banking services. In 2019, ICIC introduced InstaBiz app. It is an all- in-one business banking solution which allows features like ERP integration, Instant overdrafts, Digital KYC, Digital Business cards, multiple modes of payment collection, and a dashboard to manage and track all transaction on a single platform. Around 115 products and services are available on the InstaBiz app and web portal. ICICI Lombard offers comprehensive business insurance solutions, including property insurance, catering to the specific need of SMBs.

4) Tata Capital Financial Services Ltd.- Tata Capitals founded in 2007 is a division of Tata Sons Limited. Tata capitals provide variety of investment and financial services such as consumer finance, general insurance and infrastructure financing. Tata AIG insurance offers a wide range of insurance services for businesses, such as group health insurance, fire and burglary insurance, workmen compensation insurance.  

5) SIDBI – SIDBI is a subsidiary wholly owned by IDBI bank established in 1988 by an act of Parliament. SIDBI plays a key role in entrepreneurship development supporting small and medium businesses by means of financing, micro financing, refinancing, digital lending, modernizing production units, capacity building, market linkages and implementation of Government Schemes.

6) Bajaj Finserv- Bajaj Finserv is a non-banking financial service company that provides services to individuals and businesses like lending, asset management and insurance. Bajaj Finserv offer services to businesses, like loans, cards, insurance, investments etc to assist them in expansion, upgrades, and maintaining a working capital. With options of flexible loan repayment at competitive interest rates.

7) MUDRA- MUDRA (Micro Units Development and Refinance Agency Ltd.)  loans are given my commercial Banks, RRBs, Small Finance Banks, MFIs and NBFCs. It was launched in 2015 under PMMYS (Pradhan Mantri Mudra Yojana Scheme). Borrowers can directly borrow from any aforementioned lending institutions. MUDRA has three products Sishu, Kishore and Tarun. Each represents phases of growth for entrepreneurs.

8) Lendingkart- Lendingkart is a fintech company founded in 2014. The company uses data analytics to assess credit worthiness and provides a hassle-free loan approval. It is one of the quickest and easy access with minimal documentation.

9) Indifi Technologies- Indifi Technologies also operates in a somewhat similar model to lendingkart. It was founded in 2015 and is based on Gurgaon. It collects and analyzes data from multiple sources. The portal, after evaluating the creditworthiness of the enterprise, forwards it to another lender. Indifi provides up to 50 lakhs of term loan with interest rate of 1.5% per month and minimal processing fee of 4%.

10) SME corner- SME corner is a new age fintech company that provides collateral free loan to small and medium enterprises within 24 hours. Founded in 2014, it operates in 24 cities within 7 states. They have products like unsecured business loans and loans against property, MSME Loans and Women Entrepreneur Loans to meet the needs of working capital and encourage women entrepreneurs in India.

11) Capital Float- Capital Float was founded in 2013. It is one of the leading fintech companies providing products and services to individuals and small and medium enterprises. The company’s unique selling point is flexibility and timely credit. It provides capital assistance and short-term loan for scaling up to online retailers, small scale manufacturers and beginning B2B service providers.

12) Razorpay- These kinds of neo-bank’s digital first approach caters to the small businesses and startups. Razorpay provides seamless API payouts, Forex Fundings, fully automated payroll, quick loan disbursements empowering businesses to operate and grow with greater efficiency.

 

These are some of the leading financial institutions providing various innovative solutions to the Small and Medium Businesses. Even though they play a significant role in the growth and sustainability of SMBs in India. But SMBs require services that offer an automated experience of the financial and operational aspects of the business, allowing the owner to focus on the productive aspects of the business. Despite platforms like Razorpay making the steps toward API integration, collaboration between banks, fintechs and account aggregators- there remains significant issues of data security, privacy, trust issues and integration challenges from traditional banks and businesses.