AAs to Boost MSME Credit via GST Data
Background
Micro, small, and medium enterprises (MSMEs) are pivotal in India’s economic landscape, contributing significantly to its GDP, manufacturing output, and exports—comprising 28.8%, 33.4%, and 45%, respectively. These enterprises drive economic activity and serve as vital sources of employment, particularly in rural areas. This dual role positions them as agents of inclusive social progress, holding the potential to uplift economically marginalized communities. Despite their immense importance, MSMEs in India have been grappling with a significant credit shortfall, approximated at nearly US$380 billion.
AAs and Cash-flow Financing
A financing avenue for MSMEs is cash-flow financing by analyzing bank statements and tax data. Through the advent of AA, lenders can gain a comprehensive understanding of the intricacies of an entity’s cash flow (via bank statement data) and tax inflows (via GST data). This method accurately depicts an MSME’s financial capability and serves as a fairer assessment criterion, particularly for entities with unconventional collateral or credit histories.
The Goods and Services Tax Network (GSTN) has gone live on the AA Network as a FIP. The inflow of GST data provides a significant impetus to MSME-focused financial innovation. Including GSTN in the AA network is an important milestone in unlocking credit access for MSMEs through cash flow-based underwriting & lending. By providing lenders with comprehensive and standardized financial data, this integration empowers them to design tailored credit solutions and make faster lending decisions.
GST Data & Schemas on AA
The information available via AA includes Completed Returns Filed within the past 18 months for GSTR 1 (Table 4) detailing monthly or quarterly outward supplies and GSTR 3B reflecting monthly or quarterly self-declared summary GST returns. Additional details encompass Return Filing and Basic Profile Details, including address, legal entity name, PAN, and other relevant particulars. The data availability spans 18 months, with the “From” and “To” gaps limited to this duration. Data will be available for the completed returns filed during the period for which data is sought and not for a part of it.GST data sharing through AA is facilitated for one-time and recurring data fetch, aligning with the taxpayer’s return filing frequency.
Currently, there are 6 AAs that are already live with GSTN data, which means they allow the discovery and linking of GSTN data through the AA framework.
Spillover
As the ecosystem evolves and stakeholders embrace this transformative change, AAs pave the way for MSME growth in India. Leveraging these advancements will help empower MSMEs and foster growth in the country. The benefits of GST data on AA extend beyond fulfilling the MSME credit crunch. It will feed into larger macroeconomic benefits from a vibrant, growing MSME sector that fuels economic growth and job creation
Check out the FI types shared by GSTN here: GSTN as Financial Information Provider – Sahamati; and GSTN Data Schema published by ReBIT here: ReBIT publishes GSTN Data Schema for the Account Aggregator Framework – Sahamati