How GSTN on Account Aggregator can help MSME lenders

economictimes.indiatimes.com:

Account Aggregator framework was expected to be a watershed moment, not unlike UPI, for financial services. So far, its enormous impact has been evident in consumer lending, but with the inclusion of Goods and Services Tax Network (GSTN) on the Account Aggregator framework, credit access to micro, small and medium enterprises (MSMEs) is also expected to be eased.

The MSME sector has long been denied adequate credit due to a variety of reasons.

Smaller businesses have been historically deemed risky due to poor credit history, lack of collateral, and limited financial education, among other reasons. However, with the induction of GSTN on Account Aggregator as a financial information provider (FIP), it will become possible for lenders to gain keener insight into the cash flows of these companies.
GSTN on the Account Aggregator framework will complement bank statement data and credit scores to help lenders build more holistic credit profiles, enabling them to extend credit more widely.

GST captures transactional data that points towards the health of a business’ sales, purchases and overall financial performance.
Currently, the GSTN has more than 13.8 million users registered on the network. Through AA, this vast user base will be able to consensually share its data with lenders to secure much-needed funds by way of credit.

This financial information includes data such as the details of past and future cash flows, data around buyers and invoices, sales and purchase figures, and monthly or quarterly turnover. Aside from the tax payable, GSTN data can also give insight into the SMEs’ tax compliance behaviour, and return filing details.