Credit and Finance for MSMEs: One of India’s largest public lenders Union Bank of India in partnership with the National Payments Corporation of India (NPCI) has launched a Rupay credit card for its MSME borrowers. The Union MSME RuPay Credit Card will be available for ‘eligible’ MSME customers of the bank to meet their business-related operational expenses with interest-free credit up to 50 days, Union Bank of India said in a statement. The card will also provide the EMI facility to MSMEs on their business-related purchases.

The bank said MSMEs will also be benefitted in the form of accidental insurance coverage of up to Rs 10 Lacs, domestic airport lounge access twice per quarter, and other rewards. “This credit card will reduce the demand for cash withdrawal by MSME for business expenses besides simplifying their payment mechanism. With the newly launched credit card facility coupled with the regular working capital limits, MSMEs can reap the benefits of best in class products being made available to them by the Bank,” said Nidhu Saxena, Executive Director, Union Bank of India. 

Praveena Rai, Chief Operating Officer, of NPCI said RuPay MSME cards will support the businesses in their journey of contemporary digitisation. “We are also excited to witness the portfolio expansion of RuPay from retail users to business users.” Incorporated in 2008, NPCI is the umbrella organization for operating retail payments and settlement systems in India through a bouquet of retail payment products such as RuPay card, Immediate Payment Service (IMPS), Unified Payments Interface (UPI), Bharat Interface for Money (BHIM), BHIM Aadhaar, National Electronic Toll Collection (NETC Fastag) and Bharat BillPay.

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The move comes amid the growing MSME portfolio of the bank. Credit in the Union Bank’s MSME segment grew 6.38 per cent in Q3 FY22 ended December 31, 2021, to Rs 1.11 lakh crore from Rs 1.05 lakh crore in Q3 FY21, the bank had said in its last quarter results. Moreover, under the Emergency Credit Line Guarantee Scheme (ECLGS), the bank had sanctioned over 3.73 lakh loans to MSME and other borrowers amounting to Rs 10,562 crore by the end of Q3.

With the push towards cashless transactions, banks and financial institutions are looking to tap into the short-term credit needs of small businesses through cashless or digital solutions. In 2020, Axis Bank had partnered with embedded lending company Rupifi to launch a business credit card for MSMEs. The card provided short term credit for MSMEs’ business purchases with Rupifi’s partnering aggregator platforms. In the same year, B2B digital platform SOLV had partnered with Standard Chartered Bank to launch MSME credit card focusing on short-term working capital requirements. Likewise in April 2021, SBM Bank of India and U GRO Capital had announced a GRO Smart Business Credit Card. The card was targeted for U GRO Capital’s MSME borrowers against a fixed deposit with SBM Bank.