State Bank of India (SBI) is developing a new lending system that could use UPI transaction data to assess the loan eligibility of small businesses.
SBI Managing Director Ashwini Kumar Tiwari shared details about the proposed facility.
The system is being developed to help businesses that may not have GST registration but have regular sales and digital payments.
SBI UPI Loan Facility for Small Businesses
The proposed SBI UPI Loan Facility is mainly aimed at small businesses that receive regular payments through UPI.
For a small shopkeeper or trader, regular UPI transactions can provide an indication of sales and business activity.
SBI is working on a solution that can use this digital transaction history to assess the business’s ability to repay a loan.
This could be particularly useful for businesses that do not have a GST registration and may face difficulties when applying for traditional bank credit.
How Will UPI Data Help SBI Assess Loans?
According to Tiwari, the bank providing the loan may not always have complete information about where money is being received or spent.
However, the receiving bank and the third-party payment application handling the transaction may have relevant information about the customer’s UPI payments.
With the customer’s consent, SBI could use UPI transaction data along with other sources of information to assess loan eligibility.
The proposed model could also consider data from telecom companies and other sources. This additional information may help the bank understand the business activity of customers who do not have GST-related data.
SBI Already Uses GST and PAN Data for Loans
SBI has already addressed the lending challenge for businesses that are registered under GST.
Tiwari said that SBI can disburse loans to eligible GST-registered businesses within around 10 minutes using available GST and PAN data.
Over the last 18 months, the bank has disbursed loans worth ₹1 lakh crore using GST and PAN data, according to the information shared by the SBI official.
However, businesses without GST registration do not have the same type of data available to banks. This is where alternative digital information, including UPI transactions, could become important.
How Small Businesses Could Benefit
If the new system is successfully implemented, small shopkeepers, traders and other businesses without GST registration could find it easier to access bank credit.
Businesses with regular operations and a strong history of digital payments may benefit the most from such a system.
The proposed approach could help banks assess business activity using digital transaction records instead of relying only on traditional information.
However, the facility is still being developed, and loan approval would continue to depend on the bank’s eligibility assessment and applicable requirements.