India has the largest entrepreneur population in the world. Over 50 million people are self-employed, from street vendors to kiranas to corner stores. However lack of manufacturing and services jobs have led them to sell anything to make ends meet coupled with a weak public education system that struggles to enable 300 million young people to get skilled jobs. They either turn to menial jobs, or most likely, indulge in basic trade.
India’s micro, small & medium entrepreneurs are privy to the largest unorganized lending system in India. Distributors of all products, from soaps to sofas, software to hardware and water to watches afford unsecured, subjective business credit to their retailers. The combined value of all these credit lines is over 1 lac crore on any given day.
Interestingly 98% of these MSMEs have never borrowed a rupee from an institution, being solely dependent on multiple suppliers. This distributor mostly controls the area the retailer’s shop is located in sharing a precarious relationship with them. As long as goods are being bought as per the distributors wishes and terms the system works. When there is a dispute between two parties, invariably the smaller retailer suffers being heavily dependent on brands and often losing considerable business. It is a seller’s market at the bottom.
If India’s “aam dukandaar” had access to capital, they could choose what, when and whom to buy from. Margins would improve as they could pay up front for inventory and avail cash discounts while increasing varieties on offer.
To tackle this skewed relationship and empower retailers, Just Buy and Religare Finvest through ‘Udhaar by Just Pay’ will offer structured credit lines to eligible retailers on the platform for their stock-in-trade requirements. Just Buy aims to reach out to millions of small businessmen and women, empowering them with the freedom to become contributing entrepreneurs not just to support their families but uplifting the social fabric around them.
In the developed world, MSMEs have significant access to structured business credit, without hypothecating every asset they own.
Why not in India?
Indian retail banks have so far not lent to “aam dukandaars” citing high costs of acquisition and possible defaults. Recently the Government has also recognized this issue and has mandated all banking institutions to disburse 7.5% of their loan books as unsecured lines to the section that want to start or already own a small business.
Just Pay along with its primary lending/finance partner Religare Finvest clearly believe otherwise and have already pre-approved credit lines for over 20,000 Just Buy retailers and aim to provide 5 lac retailers with structured lines by the end of 2016.
“Offering an entrepreneur the freedom to trade I believe is a fundamental right. Why should retailers depend on their suppliers for working capital? Consumers don’t depend on car companies for loans, nor do they expect credit from shopkeepers. That’s the job of the lending banks and credit card companies. That’s what we intend to do for India’s “aam dukandaar”, give them credit lines to buy whatever and whenever. This will truly level the playing field and democratize trade,” says Sahil Sani, Chairman & CEO, Just Buy Live Enterprise Pvt. Ltd.
Kavi Arora, MD & CEO, Religare Finvest Limited says, “Udhaar is a unique, hassle free, credit facility provided at the click of a button. We at Religare Finvest Limited believe that SMEs are the engines of India's economy, innovation and prosperity. In line with this philosophy Udhaar is an offering which gives the aam dukandaar access to formal credit and a limit with multiple tranche withdrawal facility that enables the retailers to access credit as per their requirements. The ‘Udhaar’ offering will not only benefit the small retailers to build and grow the business but also enable financial inclusion at the bottom of the pyramid. This initiative further strengthens our ongoing commitment to the SME’s and the entrepreneurial ecosystem.”
Udhaar by Just Pay is a division of Just Buy Live Enterprise Pvt. Ltd. Just Buy Live is the world’s first e-distributor.
Udhaar & Just Pay are trademarks of Just Buy Live Enterprise Pvt. Ltd.
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