As plans go, it was a great one. On 21 May, roughly two months after India imposed one of the strictest Covid-19 lockdowns the world has seen, a disruptive new fintech platform was to be unveiled. One that would run like electricity through the country’s financial system. “Sahay” (in Hindi, “help”), an ambitious online lending marketplace, would be targeted at the hundreds of thousands of Indian micro, small, and medium enterprises (MSMEs). Businesses that had probably been closed and financially decimated during the lockdown.

Sahay would allow them to access a loan from banks in as few as five minutes. To do that, it would invert the established order and power equations between MSMEs and banks.

Banks generally baulk at lending to MSMEs because they’re too risky and the loan tickets are too small to be worth spending time on. So, instead of banks deciding which MSMEs they’d lend to, Sahay would let MSMEs decide which banks they’d borrow from. From a lender’s market, Sahay would turn it into a borrower’s one.

But inverting entire industries overnight isn’t easy. This is why, before Sahay could roll out, a complex web of events, systems, and companies had to fall into place. That included banks, borrowers, a data-driven GST system, and a host of regulators from India’s central bank—the Reserve Bank of India (RBI)—to sundry industry regulators.

It would also require the creation of a brand-new class of RBI-licensed entities called Account Aggregators (AA). These data intermediaries would act as consent brokers, helping expose a business’ operational data in real-time to lenders.  

If all of these pieces fell into place, out would emerge the concept of flow-based lending, where a borrower’s data would become the collateral for its loans. 

Sahay could do for the adoption of fintech lending what payments app Bhim Bhim The Ken BHIM took most in India’s payments ecosystem by surprise. But there is doubt about its future Read more did for the adoption of digital payments in 2016. 

After India demonetised over 85% of its currency notes in December 2016, it announced the birth of Unified Payments Interface (UPI), a new, free digital payments protocol. To popularise UPI, Prime Minister Narendra Modi (then in his first term) launched a free app built on top of it, called Bhim. Modi’s star power, combined with the desperate economic vacuum of demonetisation, helped UPI go mainstream, eventually clocking over a billion transactions in a month. 

Sahay was meant to be Bhim’s sequel, but for lending.

Bhim-UPI filled the cash-starved void created by demonetisation. Sahay would do the same to fill the credit void for MSMEs struck by the economic slowdown since August 2019, exacerbated by the Covid-induced lockdown.

AUTHOR

Arundhati Ramanathan

Arundhati is Bengaluru-based. She is interested in how people use money in the digital age and how new economies will take shape based on that interaction. She has spent over 10 years reporting and writing on various subjects. Previous stints were at Mint, Outlook Business and Reuters.

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