Get All Access for $5/mo

'There is no higher ratio of SME lending converting into NPA' IndusInd Bank intensify race of commercial banks' by growing interest in MSME funding.

By Sunil Pol

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.

Entrepreneur India
Sanjeev Anand, Country Head - Commercial Banking and Country Dy. Head Corporate - Commercial and Investment Banking, IndusInd Bank

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.

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).

Sunil Pol

Correspondent, Entrepreneur India

Business News

A Former Corporate Lawyer Now Makes Six Figures on YouTube — Here's How She Does It

Here are the secrets to starting and growing a successful YouTube channel, according to a YouTuber with millions of subscribers.

Business Culture

You'll Always Have Anxious Employees if You Don't Follow These 4 Leadership Tactics

Creating a thriving workplace environment hinges on the commitment of company leaders to nurture and inspire their teams.

Marketing

5 SEO Hacks to Help You Rank Fast

Discover the best SEO hacks you can use to rank fast and avoid waiting for months to see results.

Science & Technology

Why We Shouldn't Fear AI in Education (and How to Use It Effectively)

Facing resistance to new technologies in the educational process is nothing new, and AI is no exception. Yet, this powerful tool is set to overcome these challenges and revolutionize education, preparing students and professionals for a future of unparalleled efficiency and personalized learning.

Business News

Y Combinator Helped Launch Reddit, Airbnb and Dropbox. Here's What I Learned From Its Free Startup School.

The famed startup accelerator offers a free course on building a business — and answers five pressing questions for founders.