Bankers Borrowers Business Meet 2018

ASSOCHAM organized the 4th National Summit on Bankers Borrowers Business Meet with the theme ‘Coming Of Age: Changing Contours Of Relationship Between Bankers And Borrowers’ in Mumbai recently. Highlights of the deliberations at the meet:

V. Vaidyanathan, Exec Chairman, Capital First: Of the total commercial borrowing of 54 trillion, large corporate borrowing is 25 trillion, SME is 10 trillion, retail is 12.5 trillion and micro enterprises is 5.5 trillion. Let us look at SME NPAs. For PSU banks, SME NPA is 22% and for micro-SMEs it is 11%. It is lower for private banks and NBFCs. The NPA for micro entrepreneurs is the lowest. What is changing recently is that the conversation from most players in the industry is about retailization of their loan book, ie lending to the middle class of the country. What are the factors enabling this change? One is the push from the regulators. The central government is also pushing for lending to entrepreneurs. Close to 4.6 trillion of Mudra loans have been disbursed, of which 76% are to women. Some 10 years ago, lending against income tax returns was the norm. That is now changing. There is access to bureau records and GST data. Focus is more on cash flow and less on balance sheet. A lender in Africa is looking at contact data and saying that more than 50 contacts is a positive indicator. Similarly, talking to same 4 people every day was considered positively. There are 2 types of fintech lenders – with balance sheet and without balance sheet. Retail lending as a percentage of non-food credit has increased from 20% to 25% in 3 years. Retail as a percentage of incremental lending has shot up. RBI should continue to increase the number of players in this sector.