UPDATED on 10 November 2018 at 1550 to include response from CapitaWorld and SIDBI-led consortium
The Diwali gift from prime minister Narendra Modi to the micro, small and medium enterprises (MSME) sector, may well turn out to be a privacy and security nightmare for small businesses seeking 'easy loan'.
The prime minister had announced that there would be a dedicated digital platform to enable MSMEs secure in-principle approval for loan proposals of up to Rs1 crore in just 59 minutes. To enable quick and algorithmic processing of loan, Small Industries Development Bank of India, with help from CapitaWorld, set up psbloansin59minutes.com. Any MSME entrepreneur, who is seeking a loan, needs to fill up forms and provide details on this website.
Shockingly, while filing the application form, the portal asks MSME loan seekers to provide login ID and password for income-tax (I-T) website and bank account and username and password for goods and services tax (GST).
It asks the applicant to provide details of GST, I-T, net banking, directors, partners or proprietor and other details needed for the required loan.
Under the GST details, it asks the borrower to provide GST Identification Number (GSTIN), GST User Name and GST Password. For I-T details, the applicant has to provide I-T returns of the past three years in XML format or provide permanent account number (PAN), date of birth or incorporation (of the firm), and "password of income tax account on www.incometaxindiaefiling.gov.in".
As if this is not sufficient, the applicant is asked to provide bank statements of past six months in PDF format or provide "login ID and password" of bank account.
Shocking, isn't it? The moment you part with your user IDs and passwords for I-T, bank account and GST, anyone can easily misuse these details. Without providing details of GST, ITRs and bank statements or the alternative of sharing login ID and password, you cannot proceed further.
Why does any website need sensitive and private information like login IDs and passwords of I-T efiling portal and bank account under the pretext of providing in-principle loan approval?
Talking about data safety and security, psbloansin59minutes.com admits, "The portal collects sensitive data for real time loan evaluation process. Your data is safe with our cloud servers."
In addition, there no information available about ownership of the website, psbloansin59minutes.com, which is created to collect information from MSME loan seekers. All the information about ownership of this portal is hidden behind a proxy, reveals Who.is data.
For registration, as they would like to call this process of collecting all information, there is no fee charged. However, if the borrower wants to receive an ‘in-principle approval’ he needs to pay Rs1,000, plus applicable taxes.
In addition, the portal clarifies that ‘in-principle approval’ from the website does not mean the loan is sanctioned. “After offering in-principle approval, the preferred lender (as selected by borrower) will conduct a thorough due diligence and decide on whether to sanction/disburse the proposal. The final decision will be at the lender’s discretion,” it says.
Responding to this article, Blue Lotus Communications Pvt Ltd, a PR agency of CapitaWorld and SIDBI led consortium of PSBs, said, "The portal www.psbloansin59minutes.com is owned by CapitaWorld, which is owned and controlled by consortium of public sectors banks and financial institutes, including State Bank of India, Bank of Baroda, Punjab National Bank, Indian Bank and Vijaya Bank. SIDBI group, along with a consortium of banks, now holds 54% stake in fintech startup, which can be extended to 76% after achieving pre-defined milestones. Currently, four out of the seven directors of CapitaWorld are from public sector institutions. There has not been any stake sale and all the money invested by Banks is being used for the development of platform."
Talking about fee charged from borrowers, the statement says, the portal charges a success fee from banks in respect of all disbursed cases out of cases sanctioned in principle. It says, "This success fee is payable by banks and entitles the Banks to receive following additional services like credit appraisal memorandum, CMA preparation, MCA/other database access resulting in shorter credit delivery cycle. It may be mentioned that the platform may take a few years to break even."
Peri Maheshwar, publisher and founder of Careers 360, has posted these very pertinent facts and questions on social media about this site.
“Those who applied for the ‘59 Minute SME Loan’ would have got an ‘in principle’ sanction vide a mail. Much of it is auto generated with an algorithm doing the calculation and responding to the applicant and tagging a bank. Now to the real thing:
2. Capitaworld Platform is a company incorporated on 30 March 2015.
3. The company is registered in Ahmedabad, Gujarat.
4. As of 31 March 2017, the company did not start operations and had a revenue of Rs15,000.
5. The signatories of the company are Jinand Shah and Vikas Shah.
6. Another director on the board is Vinod Modha, A strategic advisor for corporates including Nirma and Mudra (Owned by Anil Ambani).
7. All loanees have to pay Rs1180 on application and 0.35% of the loan as processing fees.
8. CapitaWorld makes it’s money from the banks who in turn load it on the customer.
9. This Ahmedabad based private company will hold our data with serious connotations - net worth etc.
10. After March 2018, the company inducted 4 new directors. One of them, Akhil Handa ran Modi’s 2014 campaign.
Enough said, now the questions:
1. How can CapitaWorld sanction a loan and tag the bank? What is their locus standi? What authority? Quite simply, the sanction doesn’t mean a scrap of tissue paper. In our language, it is a lead generation platform?
2. How were they chosen? Criteria? Qualifications?
3. They were neither operational nor had experience. How were they short-listed?
4. Shahs, Ahmedabad, Gujarat. Too many coincidences?
5. Modha, Mudra, Anil Ambani...Hmm…
6. How was such a massive project trusted to a company with no experience?
7. What were the terms of the contract?
8. Any projections on how much CapitaWorld makes?
9. Is it true the Rs1,160, we paid goes to CapitaWorld and also a part of the 0.35%? Imagine a million SMEs applying?
10. Anything on data privacy and non-disclosure agreements?
The loan is a long way off. The smoking gun has already arrived! I hope some serious journalists will dig into the ownership, contract, directors and clear the air!”
They made SIDBI, State Bank of India (SBI) and other banks to invest Rs22.5 crore at a share premium of Rs119 per share in June 2018.
For a company without any operations, revenue, track record, and even the proven product, these PSU banks invested a premoney valuation of Rs19 crore. They must have used this money to develop complete product.
It is a full circle.
Now, they will tell that all these banks are shareholders in that company with ownership of more than 50% and hence, it is like semi PSU.
The most depressing aspect of the scheme, of course, is that public money from the public sector banks are being used again by politicians to dole out money under the garb of helping MSMEs. The loans under 59 minutes scheme are fully guaranteed by the Credit Guarantee Trust which means banks have no responsibility to recover the money!