Religare-Just Buy Live tie up to save the local paanwala from becoming a victim of modernisation

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Everybody who grew up in a small town is a witness of the town developing into a city. High rise buildings replace lush green fields and hyper market replaces local stores or 'kirana' stores. Amidst all this the 'paanwala' around the corner who makes the best 'paan' in the whole world is lost to an unknown. This is the future of India's micro, small and medium entrepreneurs; they are privy to the largest unorganised 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 lakh crore on any given day. They take to selling anything to run their businesses as they depend on their suppliers for working capital.

Not anymore. Targeting the offline retail stores struggling to make ends meet, Just Buy Live tied up with an NBFC, Religare, to avail credit to these retailers. 'Udhaar by Just Pay' aims to offer retailers structured credit lines for their stock-in-trade requirements.

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 have 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.

"We at Religare Finvest Limited believe that SMEs are the engines of India's economy, innovation and prosperity. In line with this philosophy 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," said Kavi Arora, MD & CEO, Religare Finvest Ltd.

The minimum credit limit would be Rs. 2 lakh with 30 day no interest period and 90 days repayment period. Religare is also taking the credit risks if the retailers default. It is also collateral free credit.

"This system is to democratize the retailer's buying ability," said Kavi. He further added that to reduce the credit risk, they are giving a larger window for repayment and also have tailor made solutions for each business as a paanwala will not obviously avail credit of 2 lakh at one go. So he can break the credit and purchase whenever he wants.

The top demand is from grocers, chemists and stationers while staples and cosmetics are the product ranges that are in high demand, said Sahil Sani, Chairman & CEO, Just Buy Live Enterprise Pvt. Ltd.

With this, the MSME sector sees hope after days of despair. Who knows, after a few months you might see the local paanwala in a fancy air-conditioned shop, smiling the best smile of his life; the smile of a better future.

(Image credits: indiatimes)
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