Digital Prayas launched by SIDBI

Digital Prayas is an app launched by SIDBI, also known as the Small Industries Development Bank of India. This body is engaged and focused on promoting, developing, and financing Micro, Small, and Medium Enterprises, also known as MSMEs. Digital Prayas SIDBI aims to help small entrepreneurs in expanding their businesses.

This article will discuss the Digital Prayaas app launched by SIDBI in the context of the IAS Exam.

Why is Digital Prayas in the news?

  • Digital Prayas app aims to sanction a loan by the end of the day, and thereby build an image of a quick finance option for those looking for immediate monetary assistance.
  • Furthermore, to reach their customers in urban locations, the bank has teamed up with BigBasket.
  • This alliance aims to provide loans to BigBasket’s delivery partners to purchase e-bikes or e-vans. 

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How can Digital Prayas help industries and businesses?

  • In the modern world, different businesses are being launched by individuals with low funds. There are several ways in which the Digital Prayas app helps businesses and industries.
  • SIDBI has partnered with Microfinance Institutions (MFIs) to pilot direct credit to MFIs under a partnership agreement with the goal of providing loans up to Rs. 5 lakh to the targeted sector of micro-entrepreneurs and micro-enterprises.
  • Such micro-entrepreneurs/micro-enterprises who want to expand or diversify their business will be helped by the plan, which is run by financial and non-financial intermediaries.
  • The Digital Prayas SIDBI program is aimed at those who have difficulty getting reasonable financing and are being charged interest rates of more than 20%.
  • It is hoped that the low-cost finance will help the borrowers improve their livelihoods, hence enhancing their chances of making a profit for their businesses.

Uses of Digital Prayas for small businesses in India

  • Many SMEs have been compelled to automate inventory management, accounting, and customer interactions as a result of the pandemic.
  • Many businesses are now offering their consumers the option of making payments via digital means.
  • A digital proof of transaction data, consumer experience, and sales performance has been established as a result. You can benefit from using these schemes in several ways.

Some main reasons why Digital Prayas is the right app to opt for loan taking are:

  • First and foremost, make the loan process easier for the borrower so they can get the money they need.
  • Beneficial to small and medium-sized enterprises (SMEs) that have little or no experience with digital transformation
  • Loan applications can be processed faster by reducing the amount of paperwork required.
  • The third step is to tailor loans and credit instruments to meet the individual demands of a wide range of people.
  • Save money and increase the number of leads that convert to sales.
  • Cost-effective in terms of fees and reasonable rate of interest.
  • Assuring a quick return while providing a variety of loans without collateral. These include:
    • Small Business Administration (SBA loans)
    • Long-term financing
    • Invoices, equipment, and purchase orders can all be financed.
    • Loans and Credit Lines (LoC)
    • Cash Advances for Merchants (MCA)
  • Thus, both borrowers and lenders benefit greatly from this digitization scheme of Digital Prayas.
  • The Digital Prayas scheme will be helpful for the delivery partners especially.
  • The CEO of BigBasket, Shri Hari Menon, expressed his happiness at SIDBI’s decision to work with BigBasket.
  • Loans will improve the financial situation of hundreds of our delivery personnel while also serving the organization’s social mission.

About BigBasket:

  • BigBasket is creating milestones in the online grocery market and has recently re-hauled its supply chains across cities to fulfil a majority of customer orders faster.
  • The company’s operations have expanded to 30 cities in India, recording about 15 million customer orders per month. BigBasket’s differentiation lies in its supply chain integration for fresh fruits, vegetables and meats, and its strong private label brands.
  • In 2020, BigBasket reached the milestone of US$ 1 billion in annual revenues.

Conclusion

  • Digital Prayas is an essential app, that opens up opportunities for low-income entrepreneurs to try their hands in the business world.
  • The quick processing of the loans makes it an easier option to explore.
  • It allows people to try their hand at their creative ventures and explore all possibilities of the business world.
  • This is one of the major developments in the financial world, and it helps to bring some stability. 

As a result, students should include this important scheme in their IAS Preparation resources.

This topic might be useful for the candidates who are preparing for UPSC 2022.

 

FAQ

How many SIDBI initiatives are there?

There are three different ways to accomplish this goal: Financial aid for the poor and women, particularly those unable to secure traditional loans. Financial institutions are supported by Responsible Finance Initiatives.

Which bank has launched this scheme?

The Digital Payas is an initiative of SIDBI or Small Industries Development Bank of India.

How much assistance does the SIDBI provide to small business owners?

SIDBI’s most notable accomplishments in the previous quarter century include providing MSMEs with INR 5.40 lakh crore in support.

Who is SIDBI’s director?

The director of SIDBI is Shri Sivasubramanian Ramann.

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