ICICI Bank launches lending facility for MSMEs based on GST returns

Private sector lender ICICI Bank has launched a facility called “GST Business Loan” to help micro, small and medium enterprises (MSMEs) get quick overdraft of up to Rs 1 crore for working capital requirements, based on their goods and services tax (GST) returns.

‘GST Business Loan’ will be available to businesses including non-customers of the bank.

“This facility brings in the improved convenience to avail quick overdraft facility, as it does away with the need for a paper-intensive assessment of financial documents, including balance sheets of previous years,” the bank said in a release.

MSMEs will be sanctioned the overdraft amount within two working days and the bank will analyse their GST returns to assess their eligibility for working capital limit.

“Since GST takes into account comprehensive business flows, we believe GST returns will change the lending paradigm for MSMEs with faster and hassle-free access to working capital finance from financial institutions,” said Anup Bagchi, Executive Director, ICICI Bank.

The overdraft amount could range between Rs 10 lakh and Rs 1 crore and would be up to 20 percent of the turnover reported in the GST return. To avail the facility, MSMEs can give residential, commercial or industrial property as collateral security. However, the customer will not have to show any financial statements.

It is renewable on an annual basis, depending on the repayment track record of the overdraft facility by the customer, ICICI Bank said.

With over one crore MSMEs registered with the GST network, the lender is hopeful the facility will give a boost to their business expansion plans.