New Delhi, Oct 10 (PTI) IDBI Bank on Monday said it has entered into a tie-up with Vay Network Services as its fintech partner to provide digital supply chain financing to MSMEs.

Vay Network is a supply chain financing platform connecting the buyer, seller and a lending institution under one roof.

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Supply chain financing (SCF) is a quicker way of payment to a supplier in a business transaction under which buyers approve suppliers' invoice which is to be financed by a third party like a bank or lending institution.

IDBI Bank said it has signed a memorandum of understanding (MoU) with Vay Network Services as its first fintech partner for e-SCF (end-to-end digitalisation) services.

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The partnership aims to contribute to the growth of SCF penetration in India, which is less than 1 per cent of GDP. Besides, SCF contributes to only 5 per cent of the outstanding banking assets/loans.

This platform is expected to reduce paperwork and transaction processing time while providing a smooth customer experience, IDBI Bank said.

IDBI Bank has an existing Cash Management Services (CMS) and e-trade platform and with the introduction of e-SCF, the bank aims to provide complete digital solutions to corporate banking and MSME clients.

Inaugurating e-SCF programme on the occasion of bank's Foundation Day, Rakesh Sharma, MD and CEO, IDBI Bank, said:"Although traditionally banks have preferred lending working capital loans over supply chain financing due to various constraints and challenges, in the present context, fintechs have revolutionized the SCF segment by digitizing the interaction between all the stakeholders."

Technology is making the process more efficient, flexible and transparent and is providing value-added services to end users, Sharma said.

Presently, the supply chain finance market in India is estimated at Rs 60,000 crore and is expected to grow by 17 per cent per annum, said J Samuel Joseph, Deputy Managing Director, IDBI Bank.

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