'There is no higher ratio of SME lending converting into NPA'

Falling in line with Mudra Bank's initiatives towards increasing MSME lending, IndusInd Bank has intensified the race of commercial banks' growing interest in MSME funding. Sanjeev Anand, Country Head - Commercial Banking and Country Dy. Head Corporate - Commercial and Investment Banking, IndusInd Bank, interacts with Entrepreneur to share his views on SME lending and Mudra bank's expectations.

Entrepreneur India

What is IndusInd's definition of SMEs?

We believe that the definition of SME should be linked to characteristics of the company and not to its investment
capacity. On an average, we define Rs 500-crore-turnover company as an SME. RBI's definition is based on
the quantum of investment made by SMEs in the plants, but we look at the buying behaviour of the companies.
It's not necessary that an SME should be investing heavily in plants.

How is the bank helping MSMEs in funding?

SMEs are important for business ecosystem. We don't look at it as a primary sector but it is a rational decision for to lend to SMEs to help them grow. SMEs are the backbone of the Indian economy while being well sustaining for long. As long as the credit model is right, it is fantastic segment in India.

In this fiscal, how much amount does IndusInd bank have lent to SMEs?

Till the second quarter in this fiscal, we have lent around Rs 10,000 crore to SMEs.

By what percentage your SME lending is increasing?

If you combine our lendings in terms of percentage growth, then YOY it's growing by 40 per cent.

Are you fulfilling what Mudra bank expects from your bank?

We are pretty much in line with what Mudra bank expect out of us. For Mudra it's a function of some complicate
formula which they have formulated. Any way we have a robust business on the SME side, so we are pretty much in line with targets set by Mudra.

What is your ratio of SME lending converting into NPA?

There is no higher ratio of SME lending converting into NPA. SMEs can have business-related problems
and as long as businesses are genuine we don't see a spurt of NPAs in SMEs.

How are RBI policies encouraging SME lending?

RBI policies are trying to nudge banks to lend more to SMEs because SMEs ultimately contribute a lot to GDP. SMEs are also part of the priority sector initiative of RBI.

(This article first appeared in the Indian edition of Entrepreneur magazine (November, 2015 Issue).