NEW DELHI: State Bank of India (SBI) has tied up with Hindustan Unilever Ltd (HUL) to offer online credit to retailers and distributors to help support the ecosystem during the pandemic—which has caused liquidity and financial crises for small businesses.
Under the partnership, the bank will offer instant paperless overdraft facility of up to Rs 50,000 to retailers for their billings with distributors as well as a financing facility to HUL’s distributors.
The company will start a pilot of the system in Mumbai and Bengaluru. SBI will also install Point of Sale (PoS) machines at HUL touchpoints in smaller cities and provide UPI-based solutions to ensure retailers can make instant payments to dealers through HUL’s Shikhar app, which helps retailers order goods directly.
Distributors have been opting for spot payments from retailers despite existing relationships since cash flows have been stretched to the breaking point. "It is our endeavour to digitise and modernise this channel; support the retailers with the right assortment and enable them to access timely and affordable funding," said HUL CMD Sanjiv Mehta.
While the recovery of general trade, which still accounts for a bulk of sales, is crucial for FMCG players, Mehta added that this channel also plays a significant role for the economy by creating employment opportunities.
The ecosystem comprising small retailers and distributors, he added, have historically been working in an environment which is informal and as such they do not have access to credit.