Merchants’ Chamber of Commerce & Industry organized a Interactive Session with Shri Interactive Session with Shri Chandra Sekhar Ghosh, MD & CEO, Bandhan Bank on “Credit Conundrum : Reading the Tea Leaves” today.
Addressing the House, Shri Ghosh said that there had been a marked difference in credit growth by banks vis–a–vis Non Banking Financial Companies (NBFCs). While credit growth by NBFCs had registered growth of 15 – 20 % last year, that of banks had fallen by 5.1 %, which was an eye opener for banks. In addition to the NPA problem of banks, some big industrialists were overloaded with loans, which resulted in fall of credit growth. He stated that 3 sectors had accounted for high NPAs viz. the big industries, the infrastructure sector and agriculture.
He explained that under Small Enterprise Loans (SEL) of Rs. 1–10 lakh category, is given without any collateral. Simplification of processes and relationship building had been the most important paramaeters. At Bandhan, 57,000 people received loans last year with a repayment rate of 100%. Out of his 80 lakh borrowers, 75 lakhs were women. He also pointed out repayment rate amongst women had been higher than men. He has kept a one–page form for loan and has ensured physical visit to the customers by his personnel, which was as high as 50 times a year.
He pointed out that there existed a huge gap in the credit disbursement for the MSME sector. “55 million MSME units, around 50% located in rural areas, contribute to 40% of exports, generating 20% of employment in the country”, he said. He pointed out that 24% of credit requirement for MSMEs were met by banks & NBFCs, 1% by themselves and remaining 75 % were met from the informal sector. MSMEs financing suffered because of paraphernalia problems and lengthy cumbersome credit disbursement processes of the banks.
He pointed out two sectors having huge uncovered credit requirements viz. MSMEs and Affordable Housing. In affordable housing too, NBFCs growth of credit had been at 17.8%, higher than 15.2% growth by banks.
The Session was chaired by Shri Sanjay Agarwal, Former President of the Chamber, who delivered the Welcome Address.