The State Bank of India (SBI) will prefer the co-origination model to cater to the financing needs of MSMEs, says chairman Dinesh Kumar Khara. Acknowledging the fact that the sector is already constrained in terms of cash flows and time gap in realizing receivables, he said collaborating is a better model than lending directly.
“The fact of the matter is that today, not many NBFCs have come in this space. 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,” Khara said.
The SBI chairman, speaking at a webinar on financing the unfinanced which was organized by the Global Alliance for Mass Entrepreneurship, pointed out that there could also be another option of financing based on the cash flow. Khara said 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.
“Also there is a broad spectrum of MSMEs in the country which work in a host of areas and often the kind of financial information coming from them is not very organized,” he explained. “So to the extent where the data is fully organized, which is more like any other large corporate, it is the kind of spectrum which SBI is engaging with. So for difficult levels of maturity of MSMEs, the comfort level with the bank also differs.” The executive said 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.
Khara said those essentially in the nano category, up to Rs 2 crore or so (turnover), the bank tends to leverage upon various fintechs who are engaging with these MSMEs. He added that SBI will be happy to deal with intermediary players in the financing business, and even help by buying out their portfolio.