A quick loan approval scheme that had Prime Minister Narendra Modi as it's face during it's inauguration could be a great money-spinner for an Ahmedabad based company. The Prime Minister had unveiled an MSME (Micro, Small and Medium enterprises) quick-loan scheme that promised loans up to Rs 1 crore within a matter of 59 minutes.
On Nov 2, most reports featured PM Modi speaking about the growth of MSMEs, and how the program would reduce the liquidity crunch in the market.
It was reported as a Diwali gift with some estimating that the government was likely to give away Rs 6000 crores in loans. SME businesses were upbeat on the launch. Many in fact had questions about the approval process and the need for collaterals to seek the loan. However the Small and Industries Development Bank (SIDBI) allayed most fears by saying that non-collateral loans up to Rs 25 lakh were being made available.
A <i>CNBC</i> report, however, says that small businesses that logged onto the website were "spooked" after they received confirmation details from a private domain called capitaworld.com. On further research, the report says, the founders of the company were private individuals based out of Ahmedabad. The venture started by a group of three in 2017 quickly reaped the services of non-banking financial companies.
Some of the services that CapitaWorld provides were processing credit-assessment files via algorithmic analytics. Obviously, the company's services came at a price. In the case of the country's latest SME loans, the price could be data-privacy.
Being a PSU and a national service, it was expected that the assessment for the loans be rendered free. However, applicants are charged Rs 1000 to seek loans. It is believed that CapitaWorld does the assessment and may be accepting a cut from the fee paid to apply for SIDBI's loans.
SIDBI has not clarified on the exact fees paid to CapitaWorld, but the <i>CNBC</i> report says that in the instance one lakh applicants chose to apply for a loan, the assessment fee itself would run to Rs 10 crore.
CapitaWorld is partially owned (56%) by public sector enterprises and banks such as SIDBI, SBI and Bank of Baroda. An official statement from SIDBI's official twitter handle says, "a rigorous process was followed for shortlisting and selection of the platform and capitaworld including third party validations and oversight."
"The company Capitaworld owned and controlled by sidbi and 5 PSBs. 4 out of 7 directors are public sector shareholders nominee," added the tweet.
Although SIDBI's confirmation does seem to provide some assurance, there are still unanswered questions on the processing time, privacy of data, security protocols, assessment fees paid to CapitaWorld and the entire business model.