New Delhi According to various statutory documents and invoicing agencies, the wealth of data captured in the GST framework about economic transactions is starting to drive the credit decisions of financial institutions, especially for small and medium businesses.
E-way bills are now mandatory for transportation of goods within and across states, and e-invoices show business-to-business transactions to the government on a real-time basis. Data from these is now forming the basis for financial institutions to track the cash flow status and credit worthiness of a corporate borrower, GST Suvidha Providers and private agencies generate these invoices and payments through software linked to the official portal. authorized to produce documents.
According to him, e-invoicing and e-way bill will have a huge impact on loan disbursement in the country and have started laying the foundation for algorithmic loan disbursement.
Ram Iyer, founder and CEO of Vayana Network, a GST facilitator and financial advisor, said e-invoicing shows the promise of having substantial collateral impact on the lending side.
Iyer said Vayana Network processes about 30 lakh requests daily for GST-related services such as GST returns, e-invoices and e-way bills from enterprises through its software interface with the official portal. “We are also a major player in supply chain financing. We finance around $1 billion per month on our platform, and e-invoicing helps establish the credibility of the debtor and gives the lender additional comfort.”
Iyer believes that many lending institutions and account groupers will use this data to support lending decisions. This is because an e-invoice shows an actual business transaction between the parties, and the invoice number assigned for the transaction is unique across the country, which makes it very useful for lenders.
According to Archit Gupta, founder and CEO of fintech firm Clear, the creation of a database related to economic activities by the GST ecosystem is a game changer. “GST has helped in creating digital infrastructure which helps small businesses to get credit easily. From October, e-invoicing required for businesses with sales of more than 10 crore in the last year. In addition, a seller’s sales data entered in the sales return fills the purchase returns of his large corporate clients, on the basis of which the latter claims the tax credit. All these records of economic activity are extremely useful for businesses to take loans and for lenders to take decisions,” said Gupta.
To be sure, GST Suvidha Providers do not have access to the data submitted by businesses to the authorities through the platforms of these service providers.
Iyer of Wayana Network said that any corrections related to e-invoicing are resolved within 24 hours, and if one has an e-invoice, which is more than 24 hours today, it will be a confirmed e-invoice. Is. “These are important factors in making credit decisions. The cost of underwriting will also be reduced because all information is available electronically. The GSTIN (registration number) is given only to those entities that fulfill the stringent KYC norms,” Iyer said.
“When we look at all these, we are on the verge of something incredible happening. For example, banks can now algorithmically determine whether credit should be granted or not. Public digital infrastructure is helping to address the issue of access to credit,” Iyer said.
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