Even as public sector banks have taken the lead in sanctioning and disbursing loans under the government’s collateral-free working capital finance scheme announced by the FM and SBI has already given loans worth Rs 19,000 crore to 4 lakh MSME’s, Uday Kotak, CII president and MD & CEO of Kotak Mahindra Bank, said that though private banks have been slow to start, they will catch up and over the next 3-4 weeks and they would have done a sizeable business under the government guarantee scheme for MSMEs.
Kotak said the eligibility conditions for the government’s Rs 3 lakh crore MSME package should be relaxed in view of the revision in turnover limit for MSMEs from Rs 100 crore to Rs 250 crore.
Addressing the MSMEs from across the country over a webinar conducted by CII, Rajnish Kumar , chairman at SBI, and Uday Kotak acknowledged that while MSMEs are more vulnerable to stress in the external environment, they said that the financing to the segment needs to improve.
Kumar said that evolution of digital technology at banks will play a big role in easier lending to MSMEs as it is making it easier for banks to verify the credentials of MSMEs and is making the assessment easy. “
“Use of tech in lending is enabling the banks to underwrite in a more scientific manner. Latest example is the guaranteed emergency credit line where Rs 3 lakh crore has been set aside and within month SBI has done 4 lakh loans worth Rs 19,000 crore,” he said.
Kumar further said that SBI is shifting its focus from home loans to MSMEs in a big way and has asked 90 DGMs to focus on MSMEs. “Housing loan was safe, easy and that was the focus. I am shifting the focus…We are doing a lot of improvements around processes. It is not an easy task for banks and the hesitation comes from past experience but methods of lending and quality of lending has to improve. We are taking steps and hopeful that we will be able to support MSMEs.,” he added.
Emphasising that building new India in a new world would need MSMEs as an integral part, Kotak, stressed on the fact that MSMEs should look to raise risk capital and good corporate governance as that would enhance their ability to raise financing from he banks.
“More risk capital needs to be brought in as that would help them withstand the risk of shock of external environment and for that venture capital and angel investors are crucial…. Besides principles of running a good business involved proper accounting, audits and ensuring that the money in business remains in business and doesn’t go into real estate. Availability of risk capital and corporate governance is the bedrock for growth of MSMEs,” said Kotak. He pointed that weak equity base of MSMEs make it difficult for bankers from time to time to support them.
Both the bankers hailed the government schemes to support MSMEs which they said were the backbone of the economy and said that the recent redefinition of micro, small and medium enterprises will enable them to grow and get larger. Kumar said that the schemes by the government are very timely and while they may not eliminate the pain of MSMEs, they would reduce the pain and help them come out of the current peculiar situation.
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