Small Industries Development Bank of India (SIDBI), the biggest lender in the vital SME segment, believes the damage to the financial system would be a lot less than expected with revival in the post-Covid economy as data from government guaranteed loans showed no spike in defaults.
SIDBI Chairman & Managing Director Sivasubramanian Ramann tells ET that the lender is leveraging the technology platforms from NSEL portal to GST network to cut its loan disbursal time period to just a third, reducing uncertainties for the borrower.
Through the entire pandemic, it was the MSME segment that was the worst hit. What is your assessment of their state now?
Interventions made by the government under ECLGS (Emergency Credit Line Guarantee Scheme) has allowed credit flows to micro, small and medium enterprises that were struggling during the pandemic. Those entities received nearly Rs 3.5 lakh crore credit. This move has prevented all of them from slipping into the non-performing asset category. A greater amount of handholding came from the combined efforts of the RBI and the government.
Are repayments happening on time?
MSMEs have bounced back. Repayments have virtually come back to normal. In the smaller units that employ limited people bad loans are likely to show up. In the micro segment, the total loan exposure is less than Rs 5 crore. We need to provide additional benefits to this particular segment. Larger entities showed tremendous resilience.
How does technology change your lending and refinancing processes?
Today we are entirely digital. We are encouraging our officers to take their laptops to help customers fill in their details for loan applications. We run algorithms to assess businesses. Our credit appraisal system flows into fully digital. Our disbursements are now entirely digital. It is a central disbursement.
Your fund of funds for start up has a sanction of Rs, 7200 crores, but the disbursements have been just about Rs. 2,500 crores. Why the gap?
This is the fund of funds. We have given sanctions to over 80 AIFs, which in turn invested about 700 companies. So, the amount of funds sanctioned is about Rs 7,200 crore. This has to go over a period of time. No company wants money in large doses. Money is always released in tranches. You are given a four to five-year period in which you deploy the funds. We will see an increase in the disbursement rate going forwards.
Banks themselves are doing priority sector funding. Will it squeeze business for SIDBI?
The future cannot be dependent on priority sector shortfall funding. We are now looking at better risk management and better lending. We aim to do greater work to build our book on direct financing. We are getting much more data and using digital tools, my entire monitoring system is getting automated. We have worked with a few fintech companies to master the art of understanding GST data.
Out of Rs 2 lakh crore total book, refinancing is 80 percent, and the rest is direct lending. How much do you aim to increase?
We are aiming for rapid balance sheet growth. We have 80 branches. NBFC refinancing is something that we want to grow. NBFCs have to get the benefit of my market borrowing. We scrutinise NBFC portfolios.