Skip to main content

GST could help banks enhance credit monitoring

GST could help banks enhance credit monitoring
The new goods and services tax regime is bringing some unintended benefits for banks.

Many lenders, including DCB Bank, ICICI BankBSE -0.15 % and Axis BankBSE 0.52 %, are now offering companies the option of filing their monthly GST returns through their website.

This will help banks enhance their credit appraisal systems, keep track of corporate invoices and cash flows, and also get access to new clients by tapping their suppliers.

This service offered by banks is particularly useful for small and medium enterprises (SMEs) that are intimidated by the new GST regime but are comfortable with internet banking.

“Our site helps customers create an invoice and reconcile their accounts,” said Praveen Kutty, president for retail and SME banking at DCB Bank. “Our expectation is that customers using our site to fill their monthly returns will eventually make ours their primary bank account. It also enhances our ability to give loans, monitor cash flows and also will help us get access to their suppliers.” He said.

DCB has 5 lakh customers, 90% of which are self-employed. Axis Bank has also allowed its customers to file their returns through its website.

“This is an additional service, customers still need help to file returns,” said Jairam Sridharan, chief financial officer at Axis Bank. “This service will gain traction only when they are comfortable with filing returns. It remains to be seen as to how much it enhances credit appraisals,” he said.

“But there are no free lunches nowadays, so banks may either charge their customers or ensure some kind of a minimum balance to offer this service,” Sridharan said, adding that Axis Bank plans to open up this facility for noncustomers in a few months’ time.

DCB Bank charges Rs 250 per month per GST identification number (GSTIN) to fill their monthly returns for firms with average current account balance of up to Rs 50,000. Each state has a different GSTIN. Firms with higher balance can use GSTIN more frequently and at a lower cost according to DCB.

Analysts said banks will look to package this new GST service along with other corporate services to get the maximum benefit.

“Banks are under constant pressure to weed out non-KYC compliant accounts,” said MS Mani partner at Deloitte. “This (service) will help them to detect these because clients that are regular in filing returns are likely to be KYC compliant,” he said.

The Economic Times, New Delhi, 25th August 2017

Comments

Popular posts from this blog

Budget: Startup sector gets new Fund of Funds, FM to allocate Rs 10K cr

  The Indian startup sector received a boost with Finance Minister Nirmala Sitharaman announcing the establishment of a new fund of funds (FoF) in the Budget 2025. The minister unveiled a fresh FoF with an expanded scope, allocating Rs 10,000 crore. The initial fund of funds announced by the government with an investment of Rs 10,000 crore successfully catalysed commitments worth Rs 91,000 crore, the minister said.   “The renewal of the Rs 10,000 crore commitment to the Fund of Funds for alternative investment funds (AIFs) is a significant step forward for the Indian startup and investment ecosystem. The initial Rs 10,000 crore commitment catalysed Rs 91,000 crore in investments, and I fully expect this fresh infusion to attract an additional Rs 1 lakh to Rs 1.5 lakh crore in capital,” said Anirudh Damani, managing partner, Artha Venture Funds.   Damani further added that this initiative will provide much-needed growth capital to early-stage startups, further strengthenin...

After RBI rate cut, check latest home loan interest rates of top banks for loans above Rs 75 lakh

  The Reserve Bank of India (RBI) has reduced the repo rate by 25 basis points from 6.50% to 6.25% in its monetary policy review as announced on February 7, 2025. After the RBI repo rate cut, banks such as SBI, Canara Bank, PNB, and Union Bank among others have cut their repo linked lending rates. Most other banks are also expected to cut their lending rates in line with the RBI rate cut. After banks cut their lending rates, their home loan borrowers will have to pay less interest. Normally, when a lender cuts the lending rate, borrowers get two options: Either to go for a reduction in EMIs or reduce the tenure of the loan. The second option will help the borrowers clear their home loan outstanding faster. In case, the borrower goes for reduction in EMI then the lower lending rate of the lender would mean lower Equated Monthly Installment (EMI) for borrowers.   EMI is the amount you will pay on a specific date each month till the loan is repaid in full.A repo rate-linked home ...

GST collections rise 9.9% to exceed Rs 1.96 trillion in March 2025

  Gross GST collection in March grew 9.9 per cent to over Rs 1.96 lakh crore, government data showed on Tuesday. GST revenue from domestic transactions rose 8.8 per cent to Rs 1.49 lakh crore, while revenue from imported goods was higher 13.56 per cent to Rs 46,919 crore. Total refunds during March rose 41 per cent to Rs 19,615 crore. After adjusting refunds, net GST revenue stood at over Rs 1.76 lakh crore in March 2025, a 7.3 per cent growth over the year-ago period.       - Business Standard 02 th March, 2025