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SBI prefers co-origination lending to MSMEs: Khara

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The State Bank of India (SBI) will desire the co-origination mannequin to cater to the financing wants of MSMEs and collaboration with fintechs is a good suggestion because it helps in assessing the danger profile of the borrower in a greater method, chairman Dinesh Kumar Khara mentioned on Saturday.

Pointing out that the Micro, Small and Medium Enterprises (MSMEs) have been constrained right this moment when it comes to money flows, time hole in realising receivables, amongst others, and in addition the extent of lenders’ confidence in funding them, Mr. Khara mentioned collaborating was a greater mannequin than lending immediately to MSMEs.

“The fact of the matter is that today not many NBFCs have come in this space,” Mr. Khara mentioned.

‘“And of late, when it comes to finding solutions, we feel that apart from lending directly to the MSMEs, there is a way forward in terms of collaborating with these NBFCs along with the biggest fintechs who have the ability to process the structured and unstructured [financial] data to have a better sense in terms of assessment of risk,” he added. Based on that assessment, Mr. Khara said, bankers felt very comfortable in lending to the MSMEs.

Mr. Khara was speaking at a webinar on ‘financing the unfinanced’, organised by the Global Alliance for Mass Entrepreneurship (GAME).

“There could also be another option of financing based on the cash flow and not on the basis of balance sheet because very often it is observed that the balance sheet and the financial statement are not available in a form which is expected by any banker,” he added.

Also, there was a broad spectrum of MSMEs within the nation that labored in a bunch of areas and infrequently the form of monetary info coming from them was not very organised, the chairman defined.

‘Fully organised data’

“So, to the extent where the data is fully organised, which is more like any other large corporate, it is the kind of spectrum which SBI is engaging with,” he mentioned.

“So, for different levels of maturity of MSMEs, the comfort level with the bank also differs,” he mentioned.

“If at all they are part of the ecosystem for a large industry major, it becomes all the more easier for the banks to get the information structured vis-a-vis unstructured relating to the [financial] dealings [of the borrower].

“And those who are essentially in the nano category, may be say up to ₹2 crore or so [turnover], there we actually tend to leverage upon various fintechs who are engaging with these MSMEs. So, we would rather collaborate with such fintechs and do the co-origination model [of lending],” Mr. Khara mentioned. He additional mentioned that SBI was taking a look at this sort of a spectrum in financing the small companies.

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