We have a cloud-first strategy: Harish Gupta, Head-IT, CGTMSE

The MSME sector in India is the backbone of its economy, with its contribution to the country’s GDP nearly a third of the total. They contribute significantly to employment generation, industrial production, and export earnings. MSMEs also foster entrepreneurship and innovation, serving as a vital component of economic development in India.

However, Half of these entrepreneurs encounter hurdles in securing loans, primarily due to a considerable credit gap resulting from the lack of collateral, rendering them ineligible for conventional loan requirements. To address this issue, the Indian government, in collaboration with the MSME and the Small Industries Development Bank of India (SIDBI), established the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) back in 2000. This initiative aimed to provide loan guarantees for MSEs, thereby enabling banks to extend credit without the need for collateral. CGTMSE is taking proactive steps to address this issue by using technology in a big way. The organization’s digital initiatives, including Mudra loans, have led to an impressive 87% increase in revenue within a single year.

Express Computer had the privilege of speaking with Harish Gupta, Head-IT, CGTMSE, who shares with us some of the key digital initiatives and their impact

Some edited excerpts from the interview:

Can you elaborate on CGTMSE’s key digital initiatives and their impact?

Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) is helping first-generation entrepreneurs realize their dream of setting up their own small business and make bank credit easily accessible and at the same time affordable without the hassles of collaterals and third-party guarantees. Technology is core to CGTMSE’s mission, to make the processes and systems easier for our member banks to transact quickly and easily, we moved from an on-premises IT setup to a cloud-first strategy.

We are using Oracle’s next-generation cloud infrastructure (OCI). We have gained auto-scalability and autonomous data management capabilities in less time. It enabled us to manage our peak loads smoothly. OCI’s security-first design architecture has helped us strengthen our overall security posture as well. Moreover, the implementation of the “Minimum data entry program” has significantly reduced the entry barriers for customers, allowing them to connect with us effortlessly through APIs. As a result, there has been a remarkable 25 percent improvement in transaction cycle times, fostering a 40 percent increase in business flow.

On the other hand, we are also trying to reach out to the MSEs, for that we are collaborating with various new edge fintech platforms such as PSBOnline, OCEN (Open credit Enablement Network) etc. which is catalysing financial inclusion by providing a digital platform for MSEs to apply for collateral-free loans, contributing to our mission of supporting first-generation entrepreneurs.

There are various other tech initiatives CGTMSE has undertaken, Applications landscape is seeing the transformation journey this year wherein application modernization is one of the major programs which encompasses zero touch guarantee project also. To bring down the human intervention and maximize the automated data flow + processing, we have come out with our own API stack covering all the business processes. Revamping our core business application, Guarantee Management System (GMS), 3i-Infotech is our partner for application modernization and API stake development.

CGTMSE is also progressing on Data-analytics / what-if-analysis / scenario simulations with the help of machine learning models of MySQL Heatwave. Our business intelligence journey is in-progress on Power BI which has delivered great insight on data in the form of dashboards.

In addition to Oracle, we work with multiple partners to ensure a top-notch service for our customers. For example, Path Infotech is a crucial partner for us who is managing our cloud platforms and managed services around it. CGTMSE is cloud matured organization by now, while our complete application stack is hosted on Oracle cloud with verity of OCI services such as Oracle Kubernetes, ATP databases, API managers, security components etc., our foundational systems like HRMS and Tally are also on other cloud providers. In terms of security, our environment is geofenced and protected by FortiGate ZTNA framework and CGTMSE is pursuing ISO 27001 compliance aiming to have a managed SOC centre.

CGTMSE has experienced an 87% increase in revenue within a single year last FY. How much of this success can be attributed to the organization’s IT initiatives, and what role has technology played in driving this growth?

Tech is at the core of the CGTMSE, we are a tech driven organization, all our business processes are digital and majority of them are automated as well. Our one of the flagship national projects “Zero touch guarantee sanction” which is part of the application modernization program, has turned out to be a boon for Banks as well as CGTMSE. It has enabled banks to avail the credit guarantee almost on real time.

CGTMSE has achieved the Rs 1 lakh crore loan guarantee mark in seven months (April-October) of the current fiscal. In comparison, the scheme had approved Rs 1.04 lakh crore guarantees in the entire FY23. The number of guarantees approved last fiscal stood at 11.65 lakh. The scheme provides credit guarantee to banks for extending loans to MSEs without seeking any collaterals, had approved Rs 56,172 crore credit guarantee in FY22, Rs 36,899 crore credit guarantee in FY21, down from Rs 45,851 crore credit guarantee in FY20, indicating decline amid Covid pandemic. Cumulatively, the scheme has approved a credit guarantee of Rs 5 lakh crore backing 76 lakh MSEs.

To achieve an impressive 87% increase in top line within a single year last year, we have implemented a series of IT initiatives. Embracing Oracle Cloud proved pivotal for us, enhancing CGTMSE’s agility by improving time-to-market for new schemes and efficiently addressing resource scaling challenges during peak periods. Leveraging tech platforms CGTMSE was able to design and roll out the new products fast. The automation of the loan application assessment process and automation of the claim application assessment and approval played a crucial role in this success story, drastically reducing processing times and enhancing overall operational efficiency.

CGTMSE has expanded its outreach to LSPs and TSPs. How has the use of APIs empowered these entities to assess borrower eligibility early in the loan application process, and what impact has this had on CGTMSE’s mission and overall effectiveness?
In addition to traditional banking, we are expanding our reach digitally by collaborating with various Loan Service Providers (LSPs) and Technology Service Providers (TSPs / FinTechs), to create a comprehensive ecosystem. Our API stack enables these entities to assess borrower eligibility early in the loan application process.

We are currently integrating with various entities, including PSBOnline, OCEN, ONDC etc. to ensure borrowers have access to affordable and quick access to credits, borrowers meet the banks on such portals.

With AI gaining prominence in the emerging technologies, we plan to invest in AI for automation and cost reduction, this includes chatbots for both public and internal use, also leveraging cognitive search and generative AI for efficient information delivery. We also intend to automate incident management, develop crash analytics, and utilise generative AI.

Can you elaborate on how CGTMSE’s migration to Oracle Cloud has contributed to the organization’s success and the growth of the MSME sector?
Considering the business growth and expansion plans then, it was very difficult for CGTMSE to continue with the fixed compute environment, therefore CGTMSE decided to move its all workloads to cloud. When we started the evaluation of cloud service providers, we found OCI cloud was fulfilling all our requirements as-a-service.

The transition to Oracle Cloud has proven to be a transformative experience for us. By harnessing the power of Oracle’s innovative cloud infrastructure, we have gained significant advantages, including automatic scalability and autonomous data management. This shift has not only bolstered the security of our applications but has also yielded increased availability and robustness. As a result, we can now channel our efforts more efficiently towards core business activities and pursue new IT initiatives with confidence. The Oracle adoption led to a 56% growth in the first year, increasing their revenue from INR 36,000 crore to INR 56,000 crore. In the second year, it surged from INR 56,000 crore to INR 101,000 crore and INR 4,000 crore. This cloud adoption has led to a 25 percent improvement in transaction cycle times, highlighting the efficiency gains. With an innovative OPEX model, we have achieved upfront cost savings of 30-40 percent compared to our previous on-premises setup. Overall, Oracle Cloud has been instrumental in catalyzing our growth and success while positively impacting the MSME sector.

Could you provide insights into the challenges and successes of CGTMSE’s strategic migration to Oracle Cloud in 2021? How has it transformed the organization’s data infrastructure and modernized its applications?

The strategic migration to Oracle Cloud in 2021 was a pivotal move for CGTMSE. Some challenges such as data transfer issues and aligning applications with Oracle’s parameters were met with hands-on support from the Oracle Technology Cloud Engineering team Path Infotech Team. The transition has transformed our data infrastructure, providing auto-scalability and autonomous data management capabilities and a more agile IT environment. The modernization of applications has resulted in a more agile and responsive IT environment. The security-first design architecture of Oracle Cloud has strengthened our overall security posture, ensuring the confidentiality and integrity of critical business data. The entire migration, completed in just four weeks, marked a pivotal success. It allowed CGTMSE to innovate faster, reduce transaction cycle times by 25 percent, and achieve significant cost savings, emphasizing the strategic importance of embracing Oracle Cloud for enhanced efficiency and security. In the last two and half years our cloud footprint / engagement has grown 3 times, which shows the confidence in the Oracle cloud.

What future initiatives and innovations can we expect from CGTMSE in terms of leveraging technology to further support MSEs and drive economic growth?

CGTMSE remains committed to leveraging technology for the betterment of MSEs and driving economic growth. Our innovation roadmap for the next 12 months includes, Data-analytics, what-if and simulations with the help of machine learning, RPA, and AI. This will be complemented by a mobility solution, a business intelligence solution. We are also focusing on full automation of receivables and payables processes through host-to-host API integration with our core banks. Additionally, our plan involves the adoption of SaaS for traditional accounting and HR systems and transitioning to a container-based microservices architecture. These initiatives aim to enhance customer experience, streamline processes, and contribute to the continued growth of the MSE sector.

We will continue to strengthen the overall credit delivery system and facilitate easy, timely flow of credit to the MSE sector. We aim to contribute to the facilitation of accessible credit for MSE businesses, promoting their growth and sustainability within the economic landscape. This dedication underscores our ongoing efforts to support the MSE sector by streamlining credit processes and enhancing financial inclusion.