India's largest lender and the biggest consumer goods maker have tied up to offer online credit to retailers and distributors at a time pandemic-related disruption has caused credit crunch for small businesses.
State Bank of India partnered with Hindustan Unilever Ltd. to provide retailers credit of up to Rs 50,000 online, according to a statement. Merchants who have downloaded HUL's Shikhar app can avail the facility, offered initially in Mumbai and Bengaluru and will later be extend to other cities.
The bank said it will offer an instant paperless overdraft to retailers for their billings with distributors. SBI will also install point of sale machines at HUL touchpoints in smaller cities and offer UPI-based support to help retailers make cashless payments to bulk dealers.
Typically, a distributor allowed a retailer seven to 10 days to pay for the stock. But the Covid-19 lockdown disrupted supply chains and demand, forcing distributors to seek upfront payments as they faced liquidity crunch. A recovery for general trade, or the channel comprising distributors and small retailers, is crucial for makers of fast-moving consumer goods as it contributes nearly 90% of the sales.
"Our partnership with SBI is a push to provide digital solutions to important constituents of our ecosystem," Sanjiv Mehta, chairman and managing director at HUL, was quoted as saying in the statement. "General trade is a very important channel for the country as it serves the needs of millions of consumers by making essential products available.”
HUL has been making attempts to digitise and modernise the channel, support retailers and help them to access timely and affordable funding, he said.
SBI said the partnership will help the bank cater to customers in the remotest part of the country. Speaking at a press conference to announce the tie-up, Rajnish Kumar, chairman of SBI, said it's a way to expand Mudra loans and will also become a model for supply-chain financing in the future.
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